April 20, 2015 World Meat Market Monthly Update Volume 14, Issue 4 Prepared by: Steiner Consulting Group, 800-526-4612 US Markets: Monthly Update US cattle futures have been on a roller coaster in the last few trading sessions as market participants have been disappointed by the limited cash cattle trade and lower prices. The spring and summer live cattle contracts declined the daily permissible limit (300 points) and deferred contracts also declined by more than 200 points. The decline followed USDA reports that cash cattle traded around $160/cwt compared to $163/cwt a week before and $167/cwt two weeks ago. The sharp erosion in fed cattle prices in the cash market has added to the anxiety of market participants that fed cattle prices are poised to break sharply lower into May and June. Fed cattle supplies normally increase this time of year and limited slaughter in March and April has added to the supply of cattle that will be available for marketing in the coming weeks. Feedlots so far this year have been able to hold the line and force packers to pay up. It appeared that April would end up following the same predictable path. That did not seem to happen, however. Poor packer margins (see chart in the next page) have caused them to sharply reduce kills, in the process backing cattle up in feedlots while at the same time pushing the beef cutout near all time record levels. For the week ending April 25, we calculate steer and heifer slaughter was around 437,000 head, 8.9% lower than a year ago and 10.1% below the five year average. This is an estimate as USDA will print the Friday and Saturday steer/heifer estimates on Monday. Slaughter the previous Friday (4/17) was a mere 100,000 head while Saturday Inside this issue: slaughter was just 4,000 head. This week is not expected to be any betUnited States Update 1 ter. The concern among market participants is that supplies of marAustralian Update 2 ket ready cattle are expected to increase in the coming weeks, a funcNew Zealand Update 2 tion of larger placements of heavy Canadian Update 3 steers last fall and the seasonally large total placement numbers last Uruguay Update 3 October. Beef production for the week was down 2.7% as heavier Brazil Update 4 weights offset half of the reduction in slaughter. The choice cutout Argentina Update 4 was modestly higher for the week although Friday the cutout lost Quota Situation 5 about $3/cwt from the previous close, further fueling the retreat in US STEER & HEIFER SLAUGHTER, JAN - DEC 000 HEAD PRELIMINARY DATA BASED ON DAILY SLAUGHTER ESTIMATES - 7 DAY RUNNING TOTAL 600 2010-14 Avg. Jan - Dec 2014 Jan - Dec 2015 560 520 480 440 Thanks giving 400 New Year Memorial Day Labor Day 4th of July Christmas 360 JAN FEB MAR APR MAY JUN JUL Aug Sep Oct Nov Dec the fed cattle complex. Currently futures are reflecting a significant decline in fed prices into the summer and fall prices are under $150/cwt, substantially lower than the high of $170/cwt paid in November 2014. In the short term, the market reaction appears justified considering the backlog of marketings. However, feedlot placements in the first two months of 2015 were 10% lower than a year ago and March placements are expected to decline by as much as 7% compared to last year. This will continue to limit the availability of fed cattle going into the year end holidays. So while end users may see a bit of a break in terms of beef prices this summer, we remain concerned about the potential for ongoing beef price inflation later in the year. Lower prices in broader commodity markets certainly continue to exert some influence but it will take time for cattle and beef prices to ease lower. Expectations for a quick correction may be overstated and it is important not to confuse seasonal declines for a major trend correction in the cattle complex. Lower year/year beef prices are coming, it is just that the process will be longer than some may expect. World Meat Market Monthly Update Volume 14, Issue 4 Australian Market: Monthly Update Page 2 Australian Cattle Slaughter Data T % Ch. vs % Ch. vs 10-Apr-15 3-Apr-15 Last Wk. 11-Apr-14 Last Yr. he Australian June 1 cattle invento- USA: March shipments to the US were Queensland ry is now forecast at 26.8 million 42,027 MT, 39.6% higher than the previous 67,054 63,391 5.8% 79,386 -15.5% head, 8.5% lower than a year ago year. In the first three months of 2015, Aus- NSW and 9.5% lower than two years ago. tralian shipments of fresh/frozen beef to the Victoria 33,900 35,473 -4.4% 38,679 -12.4% 27,444 26,671 2.9% 29,823 -8.0% Drought conditions have dramatically impact- US are running about 38,085 MT (+56%) ed beef production in Australia, forcing a higher than a year ago. We currently project SA 8,330 6,977 19.4% 8,743 -4.7% major liquidation of the cattle herd. As noted April shipments at around 36,500 MT, 46% Total in the Australian report, weather remains a higher than a year ago. Week 140,752 136,466 3.1% 161,854 -13.0% key driver for the market in the next few Japan: Exports in March were 28,074 MT, AUSTRALIAN CATTLE SLAUGHTER, HEAD months. The outlook is for above average 24.1% higher than last year. Chilled beef moisture conditions and if the outlook proves exports were 13,276 MT, +23.2% higher correct, this could significantly impact beef than last year while frozen beef exports at availability for export in Q2 and Q3. April 14,717 MT, increased by 25.2%. April shipexports are already expected to be lower than ments are projected at 24,213 MT, 16.7% February and March, largely due to holiday higher than a year ago shortened slaughter (Easter, Anzac). Below is a recap of the March export data and an early S. Korea. Exports to South Korea, which have been limited in previous months, imindication as to the export pace for April. proved in March. Total shipments of fresh/ frozen beef were 14,681 MT, 14.7% higher than a year ago. April exports are AUSTRALIAN BEEF EXPORTS TO THE US MT projected at 13,457 MT, 11.5% high- Exch. Rate: USD PER 1 AUD 50,000 120 day range, Daily, latest close April 10 er. 45,000 40,000 China: China beef demand remains 0.92 Est 35,000 a major wild card. While they have 0.90 hinders 0.88 30,000 AU exports slowed down the pace of purchases in 0.86 25,000 Australia, they still remain the third 0.84 20,000 largest market for Australian beef 0.82 0.80 15,000 Exports in March were 13,209 MT, 0.78 helps 10,000 7% lower than a year ago but a nota- 0.76 AU exports 0.74 5,000 ble increase over the 9,874 that was 0.72 27-Oct 16-Nov 6-Dec 26-Dec 15-Jan 4-Feb 24-Feb 16-Mar 5-Apr shipped in March. head Based on Oct - Sep Period 200,000 180,000 160,000 140,000 120,000 100,000 80,000 5-Yr Avg. 60,000 2012-13 2013-14 40,000 2014-15 20,000 Oct Jan Feb Mar Apr May Jun 2013 2015 2010-14 Improving moisture conditions and holiday shortened weeks have limited cattle slaughter numbers in March and early April. Total cattle slaughter for the last six weeks was 383,025 head, 10.6% lower than a year ago but still about 16% higher that the five year average. Slaughter in New Zealand is New Zealand Weekly Cattle Slaughter Based on Oct - Sep Marketing Year 90,000 5-Yr Avg. 80,000 2012-13 70,000 2013-14 60,000 2014-15 50,000 40,000 30,000 20,000 Christmas Plant Closures 10,000 Dec Jan Feb Mar Apr May Jun Jul Aug expected to remain low for the next couple of weeks before one final increase in May before the seasonal decline. High slaughter rates earlier in the marketing year are expected to limit availability but overall slaughter should remain above the five year average given the increase in the number of dairy cattle in recent years Total shipments of fresh/frozen beef in February were 42,062 MT, 0.5% lower than a year ago. Exports to the US were 22,992 MT, 2,048 MT (+10%) higher than a year ago. Exports to China, the second largest market for New Zealand beef, were 5,440 MT 11% higher than last year. Exports to Japan, on the other hand, were down 29%. Exch. Rate: NZD PER 1 US$ 120 day range, Daily, latest close April 10 0.82 hinders NZ exports 0.80 0.78 0.76 0.74 helps NZ exports 0.72 0.70 27-Oct 16-Nov 6-Dec 26-Dec 15-Jan 4-Feb 24-Feb 16-Mar 5-Apr New Zealand Fresh/Frozen Beef Exports: February 2015 Update 45,000 40,000 -0.5% Feb-14 Feb-15 35,000 30,000 25,000 10% 20,000 15,000 -18% 10,000 11% -29% 5,000 1% US China Japan South Korea Other Total Oct Nov Dec Jan Feb Mar Apr Sep Jul Aug Sep Oct Nov Dec 2014 New Zealand Market: Monthly Update head Nov May Jun Jul Aug Sep Change (MT) % Change 2,048 9.8% 551 11.3% (667) -28.6% 25 1.0% (2,163) -18.4% (207) -0.5% World Meat Market Monthly Update Volume 14, Issue 4 Page 3 Canadian F.I. Slaughter Canadian Market: Monthly Update A ccording to USDA Canadian beef production in 2015 is now forecast to decline 5.6% compared to the previous year. This forecast is only slightly higher than what was presented in October and reflects both the inventory situation and slaughter trends in the Canadian market. Extremely strong prices for cattle in the US and a strong US$ have dramatically impacted the Canadian beef market. More fed and feeder cattle are going to the US rather than slaughtered in Canada. This will continue to limit beef availability in the Cana- dian market and we think demand for beef imports, especially for imports from Australia and New Zealand should be sustained. Imports from the US are actually down so far this year. USDA data shows shipments of US beef to Canada in the first two months of the year were down 21% from a year ago and March shipments were only slightly higher than last year. The reduction in US beef imports and lower domestic beef production is expected to bolster demand for Australian/ NZ beef. The Uruguayan beef supply is capped by the TRQ limit (see chart). Permits issued for Australian beef are currently running 13.9% above last year while permits issued for New Zealand beef are up 17.7%. Foodservice and retail demand improves into the spring but market reports from Canada indicate that forward sales have been limited. Uncertainty about domestic cattle prices and competition from the US are the main problems facing Canadian importers at this time. Canada Annual Beef Production '000 MT '000 MT, carcass wt. basis. USDA 1,200 1,150 1,100 1,050 1,000 950 Cattle Cows 51,198 6,587 % Ch. vs. Last Week 28.0% 22.2% % Ch. vs. Last Year -9.5% -16.3% 4/4/2015 40,006 5,391 4/12/2014 56,596 7,869 2015 YTD 711,009 117,585 2014 YTD 773,769 138,602 -8.1% -15.2% 4/11/2015 % Ch. Source: CanFax Metric Ton QUOTA SITUATION FOR IMPORTED BEEF IN CANADA Based on Permits Issued Through March 26, 2015 40,000 2014 Quota = 35,000 MT 2015 35,000 Quota = 29,600 MT 30,000 25,000 20,000 15,000 Quota = 11,809 13.9% 10,000 77.1% 17.7% 5,000 - Australia New Zealand Uruguay 900 2012 2013 2014 2015 Oct 2015 Apr Uruguayan Market: Monthly Update Steer and cow prices in Uruguay remain weak and under year ago levels. According to data from World Beef Report, Uruguay steer prices in early April were priced around 300 US$/k cwt, 7% lower than a year ago and 21% lower than in 2013. Uruguay beef production is expected to remain well above year ago levels in 2015, which has contributed to the price decline. The latest USDA forecast projected Uruguayan beef supplies to increase 4.5% compared to a year ago and 9.5% above Uruguay Cattle Slaughter, Head 55,000 50,000 45,000 40,000 35,000 30,000 25,000 5-Yr. Avg. 2014 2015 20,000 15,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2013 levels. Weekly slaughter so far this year helps support that forecast. In the last six weeks total slaughter is up 2.3% from a year ago, with cow slaughter 14.4% above year ago levels. Since January, Uruguayan slaughter has been running about 9% above 2014. Uruguayan Shipments of Fresh/Frozen Beef: March Exports 30,000 21% Mar-14 Mar-15 25,000 20,000 metric ton 2011 15,000 77% -31% 10,000 24% 98% 5,000 -63% - China EU Russia Mar-14 6,399 3,526 1,239 2,493 8,847 22,504 Mar-15 11,357 4,360 457 4,948 US Other 6,111 27,233 Total China remains the top market for Uruguayan beef and recent reports indicate Uruguay Beef Export Markets: Mar. 2015 that Chinese demand has been increasing. Russia Total March exports were 27,233 MT, 21% 2% higher than last year. Exports to the EU US in March were 4,948 MT, double 13% Other what they were last year. In the first 23% three months of this year, Uruguay has Israel 13% shipped 11,567 MT of beef to the US against a quota of just 20,000 MT. At USA this pace, the quota may be filled by 14% China mid-year. Exports to China in March 29% were 11,357 MT, 77% higher than last year. In the first three months, China Brazil has bought 25,206 MT, 52% more Chile 3% Venezuela 2% Dec 1% than last year. Volume 14, Issue 4 Brazilian Market: Monthly Update T he early aggressive forecasts for higher beef production in Brazil have not materialized and USDA lowered its estimates for the year. Total production for the year is now forecast at 9.820 million MT (carcass wt. basis), 395k MT lower than the early estimate and now just 1% higher than a year ago. Demand in the Brazilian domestic market has struggled as the economy is poised to enter recession. It is interesting looking at the data that even as the cattle inventory in Brazil has been steadily Brazil Annual Beef Production '000 MT '000 MT, carcass wt. basis. USDA 10,400 10,200 10,000 9,800 9,600 9,400 9,200 9,000 8,800 8,600 8,400 2011 2012 2013 2014 2015 Oct increasing, the growth of the calf crop has been very limited. Inventory as of January 1, 2014 was 207.959 million head, +2.3% from a year ago. IN 2015 the inventory increased another 2.4% and in 2016 it is expected to be up 2.6%. However, the calf crop in 2014 was down 1.2% and it is expected to increase 0.6% in 2015. Weather has been a critical factor for the cattle industry in Brazil, negatively impacting productivity and limiting overall supplies. But the inventory in Brazil remains significantly higher than just a few years ago and improving feed conditions could lead to a rapid increase in cattle numbers. This is unlikely in 2015 but there is very strong potential for higher beef supplies in Brazil in 2016 and 2017 based on the growing cattle herd. Brazil exports of fresh/ frozen beef in March were 89,641 MT, 4% higher than a year ago. Total exports in Q1 of 2015 were down 22% from the previous year due to a 45% decline in exports to Russia and 49% reduction in shipments to Vene2015 Apr zuela. Argentine Market: Monthly Update USDA revised lower its estimates of Argentine beef production recently. The latest forecast pegs Argentine beef production for 2015 at 2.7 million MT (carcass weight basis), 150 million MT lower than the earlier forecast in October and now steady with 2014 levels. Cattle slaughter has been lower than earlier forecast and USDA reports also indicate that producers have limited the numArgentine Annual Beef Production '000 MT '000 MT, carcass wt. basis. USDA 2,900 2,800 2,700 2,600 2,500 2,400 ber of heavy cattle coming to market due to ongoing limits on beef exports (heavy steers are normally fed for the export market). The cattle inventory in Argentina as of January 1 was estimated at 51.895 million head, 0.7% higher than a year ago. A larger calf crop in 2015 and smaller than expected slaughter is expected to further bolster inventories and January 1, 2016 stock is now projected to increase another 1.8%. General elections in Argentina have the potential to dramatically change the outlook for the Argentine cattle and beef industry. The current government has significantly limited the supply of beef going to export markets but that could change if a new government comes to power. Exports of Argentine fresh/frozen beef were 10,341 MT in February, 31% higher than a year ago. 2,300 2011 2012 2013 2014 2015 Oct 2015 Apr Page 4 Brazil Fr/Fz. Beef Exports Fresh/Frozen Beef, March 2015 Other 44% Egypt 10% Russia 19% Hong Kong 21% Venezuela 6% Fresh/Frozen: March 2015 Update 100,000 4% 90,000 80,000 70,000 metric ton World Meat Market Monthly Update 60,000 50,000 30% 40,000 30,000 -12% 7% 20,000 -44% -10% 10,000 - Russia Hong Kong Venezuela Egypt Mar-14 19,281 17,438 8,764 10,425 30,660 86,569 Mar-15 17,028 18,620 4,924 9,334 39,735 Other 89,641 Total Argentine Fr/Fz. Beef Exports Fresh/Frozen Beef, February 2015, MT & % Other 14% Russia 12% EU 8% China 25% Chile 26% Israel 15% ARGENTINE BEEF EXPORTS: 2003 - 2015 MT 50,000 40,000 30,000 20,000 10,000 - 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 FR/FZ BEEF OFFAL PROCESSED HILTON CUTS World Meat Market Monthly Update C Volume 14, Issue 4 Page 5 Irish Market: Monthly Update ow prices in Ireland have increased sharply in the last few months, widening the gap with EU-28 values. For week ending April 12, the O3 cow price was quoted at $3.43/kg (dressed wt), 21.8% higher than the same week a year ago. The average price for EU28 was around $3.00/kg, only 2% higher than a year ago. Smaller than expected supplies and strong demand for Irish beef, especially grinding beef, has helped underpin prices. It is interesting to note that prices for Irish R3 steers have not received the same kind of O3 Cow Price, Ireland & EU-28, Euro per 100kg 380.0 360.0 340.0 320.0 300.0 280.0 260.0 240.0 220.0 2013 2014 2015 IRELAND BEEF PRODUCTION, 1000 TON support, again underscoring the fact that the main driver behind the surge in cow prices is stiff demand (and higher world prices) for grinding beef. The price of R3 steers in Ireland was last quoted at $4.09/kg (week ending April 12), 9.1% higher than a year ago. Irish steer prices are under the EU-28 average (currently $4.32/kg). Beef production in Ireland in February was reported at 45,500 MT, 0.8% higher USD per 1 EURO than a year ago. Production in January was 47,190 MT, 4.3% lower than last year. More recent data, however, shows a steep drop in cattle availability. According to an Irish Food Board report, “cattle supplies at export meat plants for the week ending Ireland April 11th stood at just under 29,000 EU-28 head which was 11% behind supplies for the same week last year. Cumulative supplies for the year to date are down around 11,000 head on supplies for the corresponding period last year standing at around 460,000 head. “ We do not have data as to the pace of export shipments to the US at this time but will report on progress in future updates. 000 tons Source: Eurostat 60.00 55.00 50.00 45.00 40.00 35.00 30.00 Jan Feb Mar Apr May Jun 5-Yr Avg. Jul 2014 IRELAND BEEF PRODUCTION, 1000 TON. SOURCE: EUROSTAT Ireland Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 2010 2011 2012 2013 2014 2015 41.11 40.01 42.06 45.95 49.31 47.19 45.83 41.89 39.75 42.50 45.14 45.500 51.81 48.66 37.95 38.16 48.20 44.87 45.05 37.36 40.94 49.13 43.70 44.55 39.50 41.62 48.70 45.40 44.96 35.18 36.41 46.13 43.42 38.89 38.41 43.70 45.72 44.55 47.60 42.79 39.88 46.31 52.63 51.87 42.18 47.74 53.28 48.71 50.80 51.56 51.50 53.91 54.31 53.47 48.81 47.26 48.23 41.71 37.69 39.06 41.03 46.55 558.05 545.44 494.61 516.69 580.61 5-Yr Avg. 43.69 43.02 44.96 43.47 43.61 41.62 42.03 44.23 49.54 51.30 50.42 41.21 539.08 Y/Y % Ch. %. Ch vs. 5- -4.3% 0.8% 8% 6% Aug Sep Oct 2015 Nov Dec World Meat Market Monthly Update Volume 14, Issue 4 Beef Within TRQ Entries into the US Page 6 Cold Storage Stocks THOUSAND POUNDS Amount YTD in Kilograms as of April 20, 2015 BONELESS BEEF, COLD STORAGE STOCKS 460,000 Quota Levels % Filled 2015 Year to Date 440,000 Country 4/21/2014 4/20/2015 % Change Australia 55,711,476 99,828,669 79% 418,214,000 Canada 53,535,802 55,804,959 4% N/A Mexico 27,546,421 36,894,326 34% N/A New Zealand 56,169,794 68,187,147 21% 213,402,000 32.0% 35,927 45,955 0% 200,000 23.0% 4,411,935 4,791,221 9% 20,000,000 24.0% 0 0 #DIV/0! 20,000,000 0.0% 320,000 14,804,019 18,001,827 22% 64,805,000 27.8% 300,000 212,215,374 283,554,104 34% 420,000 Japan 23.9% BONELESS BEEF, COLD STORAGE STOCKS, THOUSAND POUNDS, END OF MONTH INVENTORIES 400,000 380,000 360,000 340,000 Uruguay Argentina Other Countries JAN FEB MAR APR 5-Year Average Total THOUSAND POUNDS Year/Year Comparison of Shipments Kilogram MAY JUN JUL AUG 2010 - 2014 SEP OCT 2014 NOV DEC 2015 BEEF CUTS, COLD STORAGE STOCKS 65,000 120,000,000 60,000 2014 100,000,000 2015 55,000 BEEF CUTS, COLD STORAGE STOCKS, THOUSAND POUNDS, END OF MONTH INVENTORIES 80,000,000 50,000 60,000,000 45,000 40,000,000 40,000 35,000 20,000,000 30,000 JAN 0 Australia Canada Mexico New Zealand Japan Uruguay Argentina FEB MAR APR 5-Year Average Other Countries MAY 2010 - 2014 JUN JUL AUG SEP OCT 2014 NOV DEC 2015 US Weekly Cow Slaughter, 000 Head Total Dairy Beef 2/21/2015 101.7 57.3 44.4 2/28/2015 102.8 58.4 44.4 3/7/2015 102.3 60.1 42.2 3/14/2015 102.0 60.5 41.5 3/21/2015 103.2 60.4 42.8 3/28/2015 104.5 59.1 45.3 6-wk Average 102.7 59.3 43.5 % ch. from year ago same period -8.0% -0.1% -16.9% 2015 (Jan-Feb) 903 517 385 2014 (Jan-Feb) 975 507 468 -7.4% 2.0% -17.7% ESTIMATED WEEKLY FEDERALLY INSPECTED TOTAL COW SLAUGHTER 145 5 YEAR AVERAGE 2014 2015 135 115 105 95 2014 SATURDAY DATES 12/5/2015 12/19/2015 11/7/2015 11/21/2015 10/24/2015 9/26/2015 10/10/2015 9/12/2015 8/29/2015 8/1/2015 8/15/2015 7/4/2015 7/18/2015 6/6/2015 6/20/2015 5/9/2015 5/23/2015 4/25/2015 4/11/2015 3/28/2015 3/14/2015 2/28/2015 2/14/2015 1/31/2015 75 1/3/2015 85 1/17/2015 THOUSAND HEAD 125 % Ch.
© Copyright 2024