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Hurricane could weaken US beef market

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Well-known member
Mar 2, 2005
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Hurricane could weaken US beef market
Rangeland News

US importers continued to buy on only a spot basis this week, as the market assessed the possible impacts of Hurricane Katrina.
This severe hurricane devastated large areas of the states of Louisiana and Mississippi, particularly New Orleans, leaving around one million people homeless. It also closed and damaged oil rigs in the Gulf of Mexico, which supply a quarter of US oil.
One immediate impact on the US meat market could be a shortage of refrigerated trucks to transport local US meat (including beef), as trucks are diverted to the rescue effort. This would give imported beef an advantage, as it is shipped directly to the main east and west coast meat processing and population centres. Also, there could be a short-term fall in poultry supplies in the US, as the hurricane-affected region is a major poultry production centre.
However, the main and lasting impact for the beef market is likely to be negative, due to the effect of the oil price shock on disposable incomes and on eating out. Petrol prices to US consumers recently pushed past US$2/gallon for the first time, which, together with the fall in the number of Americans on the Atkins high protein diet, is accredited with causing an apparent drop in US demand for beef (and imported beef prices) so far this year. Following the hurricane, petrol prices have pushed past US$3/gallon and some are predicting US$4/gallon this coming winter.
Such a hike in petrol costs is likely to cause consumers to eat out less, travel less and cut food spending. Retail demand for ground beef may benefit from consumers shifting to cheaper meat purchases, but fast food custom is likely to fall, reducing demand for manufacturing beef overall.
Despite these threats, US imported beef prices lifted this week, on light trading. The price of 90CL Australian cow beef rose 2.5¢, to 129.5US¢/lb (CIF), still 9% lower than a year earlier. With the A$ a little lower, the price to Australian exporters rose 9¢, to 345A¢/kg (FAS) – 17% below last year.

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