Australian beef unlikely to be in Trump's sights

Australian beef unlikely to be in Trump's sights

Beef News
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US beef supply chain turmoil prompts greater protectionist talk

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AUSTRALIA can take comfort in the fact its prized lean trimming trade with the United States compliments their system as the pandemic continues to wreck havoc across US beef supply chains.

Hints of greater protectionist moves in relation to beef from the US president would likely be directed at other suppliers long before Australia, industry leaders both here and in the US believe.

As the US Department of Agriculture conducts a formal investigation into the disparity between its live cattle and boxed beef prices, reports are filtering through that most plants shut down by virus outbreaks are now back up and running.

However, US beef processing is still running at just 70 to 75 per cent capacity, analysts say.

US beef processors are notching up extraordinary profits never before seen as they sit between a falling livestock market and strong consumer demand for beef.

Market analyst Simon Quilty said up to $1500 a head profit was currently being put away by meatpackers, with more than 1.5 million head of finished cattle expected to be backed up in the system very soon.

US fed steer prices have taken a 20pc dive since January.

US beef production has dropped by around 30pc each week of May and that has had a dramatic effect on retail and wholesale prices, Mr Quilty said.

The beef cut-out (total of all the wholesale prices of each individual item in a carcase) lifted by as much as 112pc this month but Rabobank says there has now been some decline as greater supplies have started to flow again.

The latest consumer spend data shows the prices paid by US consumers for food at grocery stores jumped 2.6pc for April.

The situation has some US producer organisations calling for the prioritisation of US raised cattle over foreign product during the COVID-19 pandemic.

However, when President Trump this week suggested some beef-related import bans may be on the cards, the main US advocacy body, the National Cattlemen's Beef Association, issued a statement far more comforting to Australia.

"Beef trade is a complex business, and America's cattle producers rely on safe and reliable international trading partners, both as a destination for the undervalued cuts we produce here, such as hearts, tongues, and livers, and for importation of lean trim for ground beef production to meet strong consumer demand," NCBA's Colin Woodall said.

Australia is the largest exporter of trim to the US.

US National Cattleman's Beef Association's Colin Woodall, based in Washington, at the last Beef Australia in Rockhampton.

US National Cattleman's Beef Association's Colin Woodall, based in Washington, at the last Beef Australia in Rockhampton.

Shipments to the US of Australian beef overall, however, were down 28.1pc year-on-year in April in reflection of coronavirus instability.

Mr Woodall said around 12pc of beef consumed in the US was imported product, but that must meet the US standards for safety before it is allowed in.

Rabobank senior analyst Angus Gidley-Baird said Australian and US standards marry up well.

"We're not pushing product into their retail space at a low price point - our product fits into their system well which should provide some confidence for Australian maintaining access," he said.

"Australia is not likely at the top of the list in terms of changes their cattlemen want."

Washington-based Meat & Livestock Australia regional manager Rob Williams described some of the US beef shortage claims as hype.

In MLA's On The Ground podcast released today, he said there were no doubt shortages in retail of certain cuts but an overall beef shortage in the US was highly unlikely.

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