Midfield
Australia - Dollar hits manufacturing beef trade
17 Nov 2010
THE Australian dollar's historic eclipse of the US greenback this week has highlighted the dramatic changes being seen in the international grinding meat trade this year caused by currency movements.
The Australian dollar continued its upwards spiral, hitting US100.2c during trading on Tuesday.Driven squarely by currency, Australia's manufacturing beef shipments to the US for the month of October totalled just 8951 tonnes. That's the lowest figure for any month since January 1996, and a 45pc slide on the same month last year, as exporters seek customers in other parts of the world less exposed to currency changes.
Russia, on the other hand, has seen a dramatic five-fold increase in Australian grinding beef imports over the same 12-month cycle.
So significant is the currency impact that some analysts are suggesting that after 40 years dominating Australia's grinding meat price trends, the US may no longer provide the price-setting role for Aust-ralian 90CL manufacturing product.
Instead those price signals may now be set by a basket of "second-tier" markets, including Russia, Indonesia and others.
Recent reports out of the US illustrate just how profound the currency impact has been.
US Cattle Buyers Weekly publisher, Steve Kay, reports a record-wide price premium has emerged
for imported lean (90CL) beef over US domestic 90CL beef, causing headaches for importers and some US end-users.
While total beef imports to the US for the year to date are down only 5pc on the same period last year, imports from Australia (predominantly frozen 90CL) are down 27pc, and from New Zealand, down 6pc.
So far this year, Australia has filled only 40pc of its tariff-free US quota of 379,0000t, sliding to second place behind Canada as the largest outside supplier to the US.
US market analyst, Graeme Goodsir, said the import trade remained very light due to Australian, New Zealand and Uruguayan exporters selling at higher prices to other world markets to counter the weak US dollar.
Reduced imports meant a fortnight ago, imported 90CL beef was being offered at more than US170c/lb landed. That compared with fresh domestic 90CL at around US146c.
Import prices were US6-10c/lb beyond any "realistic level," Mr Goodsir suggested.
"There hasn't been such a huge price distortion since Australia began exporting beef to the US in the 1950s. Some importers can't buy any imported beef, so they are resorting to buying fresh domestic cow beef, freezing it and trying to sell it to users of lean imported beef."
MLA's North America region manager, Scott Hansen, said up to the start of October, Australian exports to the US were down 50,000t shipped weight compared with last year.
"To put it into some context, that decline is about the same as Australia's entire boxed beef exports to Indonesia in 2009-10, and twice the amount sold to Russia," he said.
Mr Hansen said while currency was the overwhelming factor in the decline in trade, weather and other supply-related issues out of Australia had also contributed.
"It's not as if there is a weakness in the US marketplace in terms of demand, or a real supply issue out of Australia. The reason Australia is looking at such low volumes into the US this year is purely because the US purchasing power has been eroded at exactly the same time as alternative customers have vigorously entered the marketplace, and the dollar has shot-up against the greenback."
He stressed that while record premiums were evident in the US for grinding beef, this needed to be interpreted appropriately.
"Prices hit US178c/lb for Australian 90CL beef in April, and continue close to that level. A year earlier, that price was US131c/lb - a US47c/lb price rise."
"That's in US dollar terms, but when the figures are converted back into Australian currency, it tells an entirely different story. The market in April 2009 was putting A190c/lb back into the pocket of the Australian exporter. A year later, in April this year, the US178c/lb all-time high price converts into A190.5c/lb. So what appears on paper to be an incredible record price increase is in fact completely lost when the currency value is applied."
The message from this is that there is no bonanza in the current US market environment for Australian grinding meat suppliers.
"By the time the Australian exporter converts the current record prices in the US back into Aussie dollars, they are getting offered the same or better money out of Indonesia, Russia or elsewhere," Mr Hansen said.
He stressed, however, that the sheer size of the US market meant it would remain of fundamental importance to Australia's grinding meat trade for a long time to come.
"When there's a big killing week on in Queensland, the US remains vitally important to the Australian industry because of its ability to soak up large volumes of product. And the day will come when the dollar does ease again, and the US will re-assert itself as the key grinding meat market."
In light of the imported supply shortage, US grinding beef customers were turning more to domestic supply, Mr Hansen said.
While the US cow liquidation of last year was expected to slow down during 2010, cow kill had in fact continued on, and may be increasing.
"US cow kill, year to date, is now running 11pc above 2009, which itself was a high year. Some analysts are now saying 2010 will be the second-highest year ever for heifer placement in feedlots, suggesting the US cow herd could fall below 31 million for the first time since 1963," Mr Hansen said.
Extraordinary times, indeed.
In Australia, NLRS reports medium cow prices peaked near 300c/kg in late September, and continue at recent highs about 20c/kg above where they sat this time last year.
Source: farmonline.com.au
Australia - Dollar hits manufacturing beef trade
17 Nov 2010
THE Australian dollar's historic eclipse of the US greenback this week has highlighted the dramatic changes being seen in the international grinding meat trade this year caused by currency movements.
The Australian dollar continued its upwards spiral, hitting US100.2c during trading on Tuesday.Driven squarely by currency, Australia's manufacturing beef shipments to the US for the month of October totalled just 8951 tonnes. That's the lowest figure for any month since January 1996, and a 45pc slide on the same month last year, as exporters seek customers in other parts of the world less exposed to currency changes.
Russia, on the other hand, has seen a dramatic five-fold increase in Australian grinding beef imports over the same 12-month cycle.
So significant is the currency impact that some analysts are suggesting that after 40 years dominating Australia's grinding meat price trends, the US may no longer provide the price-setting role for Aust-ralian 90CL manufacturing product.
Instead those price signals may now be set by a basket of "second-tier" markets, including Russia, Indonesia and others.
Recent reports out of the US illustrate just how profound the currency impact has been.
US Cattle Buyers Weekly publisher, Steve Kay, reports a record-wide price premium has emerged
for imported lean (90CL) beef over US domestic 90CL beef, causing headaches for importers and some US end-users.
While total beef imports to the US for the year to date are down only 5pc on the same period last year, imports from Australia (predominantly frozen 90CL) are down 27pc, and from New Zealand, down 6pc.
So far this year, Australia has filled only 40pc of its tariff-free US quota of 379,0000t, sliding to second place behind Canada as the largest outside supplier to the US.
US market analyst, Graeme Goodsir, said the import trade remained very light due to Australian, New Zealand and Uruguayan exporters selling at higher prices to other world markets to counter the weak US dollar.
Reduced imports meant a fortnight ago, imported 90CL beef was being offered at more than US170c/lb landed. That compared with fresh domestic 90CL at around US146c.
Import prices were US6-10c/lb beyond any "realistic level," Mr Goodsir suggested.
"There hasn't been such a huge price distortion since Australia began exporting beef to the US in the 1950s. Some importers can't buy any imported beef, so they are resorting to buying fresh domestic cow beef, freezing it and trying to sell it to users of lean imported beef."
MLA's North America region manager, Scott Hansen, said up to the start of October, Australian exports to the US were down 50,000t shipped weight compared with last year.
"To put it into some context, that decline is about the same as Australia's entire boxed beef exports to Indonesia in 2009-10, and twice the amount sold to Russia," he said.
Mr Hansen said while currency was the overwhelming factor in the decline in trade, weather and other supply-related issues out of Australia had also contributed.
"It's not as if there is a weakness in the US marketplace in terms of demand, or a real supply issue out of Australia. The reason Australia is looking at such low volumes into the US this year is purely because the US purchasing power has been eroded at exactly the same time as alternative customers have vigorously entered the marketplace, and the dollar has shot-up against the greenback."
He stressed that while record premiums were evident in the US for grinding beef, this needed to be interpreted appropriately.
"Prices hit US178c/lb for Australian 90CL beef in April, and continue close to that level. A year earlier, that price was US131c/lb - a US47c/lb price rise."
"That's in US dollar terms, but when the figures are converted back into Australian currency, it tells an entirely different story. The market in April 2009 was putting A190c/lb back into the pocket of the Australian exporter. A year later, in April this year, the US178c/lb all-time high price converts into A190.5c/lb. So what appears on paper to be an incredible record price increase is in fact completely lost when the currency value is applied."
The message from this is that there is no bonanza in the current US market environment for Australian grinding meat suppliers.
"By the time the Australian exporter converts the current record prices in the US back into Aussie dollars, they are getting offered the same or better money out of Indonesia, Russia or elsewhere," Mr Hansen said.
He stressed, however, that the sheer size of the US market meant it would remain of fundamental importance to Australia's grinding meat trade for a long time to come.
"When there's a big killing week on in Queensland, the US remains vitally important to the Australian industry because of its ability to soak up large volumes of product. And the day will come when the dollar does ease again, and the US will re-assert itself as the key grinding meat market."
In light of the imported supply shortage, US grinding beef customers were turning more to domestic supply, Mr Hansen said.
While the US cow liquidation of last year was expected to slow down during 2010, cow kill had in fact continued on, and may be increasing.
"US cow kill, year to date, is now running 11pc above 2009, which itself was a high year. Some analysts are now saying 2010 will be the second-highest year ever for heifer placement in feedlots, suggesting the US cow herd could fall below 31 million for the first time since 1963," Mr Hansen said.
Extraordinary times, indeed.
In Australia, NLRS reports medium cow prices peaked near 300c/kg in late September, and continue at recent highs about 20c/kg above where they sat this time last year.
Source: farmonline.com.au