The United States has an “insatiable appetite” for beef and is currently Australia’s largest export market ahead of Japan and China.
In the first half of this year, Australia exported 155,430 tonnes of beef to the US, which is up 75 per cent on the same period last year, and the highest since 2015.
And it’s not just grinding beef for making hamburgers.
According to Meat and Livestock Australia (MLA), the US has also become our biggest market for loin cuts, such as scotch fillets and tenderloins.
So what’s happening?
After three years of drought, the US cattle herd is at its lowest point since the 1950s.
Its domestic supply of beef is down, but demand remains strong in a nation famous for its love of hamburgers.
Global Agritrends analyst Simon Quilty, said the US had been forced to import large amounts of beef.
“They have an insatiable appetite and are sucking up as much lean meat globally to blend with their own meat [to make hamburgers],” he said.
“Grinding meat, which is a by-product of processing cows, is going up in value and we’re seeing record prices on a day-by-day basis in America.”
He said the US price for fresh 90CL beef was a record $US3.75 per pound ($A12.53/kilogram), however the US was not paying record money for Australian beef.
“They’re not paying record money for Aussie beef yet,” Mr Quilty told ABC Landline.
“At the moment they’re paying about $2.50 per kilo less for the Australian product compared to the domestic US fresh 90CL.
“What’s happening, is the United States is importing beef from other nations like Brazil, which is undermining the value of Australian beef.”
Competition from Brazil
Mr Quilty said Brazil had been shipping record amounts of beef into China in recent years, but with China’s economy slowing and US demand heating up, the beef trade had changed — despite tariffs.
“So Brazil reached its quota of beef to the US within the first three months of this year, but they’re still shipping beef outside of that quota and paying a duty of 26.4 per cent because it’s still a better alternative than shipping beef to China or other parts of the world,” he said.
“That’s how good the American market is, compared to the rest of the world, for Brazilian beef at the moment.”
He said June shipments of Brazilian beef to the US had skyrocketed to 17,500 tonnes and he expected those volumes to continue for at least the next four months.
What next?
Meat and Livestock Australia’s Tim Jackson said the herd rebuild in the United States hadn’t “technically started”, but it was clear that destocking was “definitely slowing down” and that weather conditions were improving.
He said cattle prices in Australia had started to rise this month and the national processor cow indicator was now at its highest level since February of 2023.
Mr Jackson said the rising price was due to a number of factors, “but in particular we’re seeing very strong export demand from the United States for all sorts of meat”.
Mr Jackson said the key question for the rest of the year was the economic performance of China.
“The world’s largest beef importer and second largest economy has seen a slowdown in key economic indicators,” he said.
“If export volumes into China begin to materially decline, it would accelerate the diversification of South American exports further and likely put considerable pressure on cattle prices.”
Mr Quilty said the US becoming Australia’s biggest market for loin cuts was interesting and a sign that its record demand for lean beef was “lifting all boats”.
He is forecasting global beef prices to surge in the coming months, similar to how they did in 2014 and 2004.
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