Anyone wired in to sell cattle during winter/spring has raked in record-breaking prices, whether that’s selling store or plugging finished stock into processing plants. Grass has clearly been a major factor, exaggerating processor shortages and in turn pushing schedules higher. This and an early “spring grass market” have sent store cattle silly too.
But strong export returns from the United States have allowed processors to offer good money as well. The question is how much longer can we expect the US prices to stay afloat?
If we rewind a few months, back-to-back years of drought meant the US walked into 2024 with the smallest breeding herd since 1941. Combined cow and replacement heifer numbers dropped to 46.5 million, down 4.5 million from the start of the decade.
Since bull farming is a rarity in the US (less than 2% of the total cattle kill), there’s a major reliance on cows to supply the lean grinding beef used in making beef patties. With the drought over, suddenly the number of cull cows arriving at the US processors fell sharply, creating major shortages and sending prices for fresh US lean grinding beef to all-time heights.
However, there’s a second side to this story that’s slid under the radar – how much beef is being shipped to the US. It’s not surprising that Australia is funnelling much more beef into the US. Its herd is well and truly rebuilt and its cattle kill is flying at the quickest rate since the big droughts in 2018/2019.
This is a major reason why frozen imported beef (that is, what Australia and New Zealand supply) has traded at a big discount to equivalent fresh beef from within the US, especially since not all US buyers are set up to use frozen beef.
But Brazil has been a bit of a wildcard. It was always going to cash in on the strong demand too – though it operates under a restrictive quota. Tariffs jump to 26.4% for any beef sold beyond this limit. Usually, this squeezes most of its US sales into the start of the year. However, with its main buyer, China, in a weak position, Brazil has kept sending boatloads of beef to the US even after the tariff-free quota was filled.
In total, US imports of frozen boneless beef from Australasia and South America through January-July were the highest since 2015, up 119,000 tonnes or 44% versus only a year earlier. The lift is even sharper when you include other cuts of beef.
When you map those US beef imports against their cow/bull production, suddenly there’s a 6.5% lift in manufacturing beef traded versus last year. Admittedly, total beef inventories in the US at the end of July were low compared to the past decade, but it shows that demand has been just as important as supply when it comes to driving prices higher.
And this is where it gets interesting. Over the past few weeks, the US imported beef prices have been strong, but with limited upside. Labor Day in the US (the first Monday of September) is the traditional marker for when demand for grinding beef starts to slow and cow production starts to lift. Whether the prices can hold with the current amount of beef on the market is debatable, yet we’ll have a lot more to sell into the US between now and Christmas as our cattle kill picks up steam.
