Asia pacific demand slowdown spurs beef exports to the US
The Asian Pacific beef market continues to face demand challenges due to broader economic issues, with priority focused on exports to the US. In May 2024, high slaughter rates in Australia pushed beef/veal exports to 113,923 mt, the highest level since December 2019. Reaping the benefits of beef herd rebuilding since 2021, Australia is now in a strong position to supply the tight US market.
New Zealand’s beef output is declining as the cow cull season wraps up in June. Beef production in 2024 has been lower, reflecting the country’s focus on herd retention due to abundant pastures.
In China, demand for Australian and New Zealand beef/veal has been dampened by a surplus of cheaper Brazilian beef and high domestic production. Key importers like Japan face a slowdown due to the rainy season, while Korea contends with weak consumer demand in the food service sector. Nevertheless, as the US export supply dwindles, both Japan and Korea are increasingly turning to Australia and New Zealand to meet their import needs.
Drop in conch imports tightens U.S. supply
At the year’s midpoint, the Honduran conch season is ending, resulting in a tightening supply of fully cleaned products and a firmer overall market. According to U.S. Census import data available through April 2024, conch imports into the U.S. totaled 2.25 million on a year-to-date basis, a 13.5% decrease compared to the same timeframe in 2023. This is the lowest January through April volume since 2021 when imports were just under 2 million pounds.
Typically, conch prices remain within a specific range, but they spiked in 2021 due to supply chain issues caused by COVID-19. In contrast, 2022 saw the highest import totals to date, leading to a rapid market adjustment and significantly lower prices compared to the previous year’s premiums, aligning more with historical averages. Currently, the average price is at a 52-week high, matching the price point from the same time last year.
The closure of the Honduran conch season is putting pressure on both supply and prices in the U.S. market, with current prices already at a 52-week high. Market participants remain cautious due to seasonally slower summer demand and the possibility of Honduras reopening its season in August. This situation underscores the recent market volatility and the significant impact of supply fluctuations on conch prices.
Shrimp retail prices declining but not noticed
Margins have been tight in recent years for retailers given some of the increased costs associated with running the business including wage inflation, higher rent and energy costs, increased cost of capital, and upward trends in many costs of goods sold. One item that has remained relatively low on a wholesale level, sometimes at long stretches at record lows, has been shrimp. But for a long time, retailers appeared to use this item to offset contracting margins on other items. This led to demand destruction at the retail level.
But if a price is attractive, and nobody walks the aisle, does it still make an impact? Since the start of 2023, the average price of shrimp at retail has declined nearly 10%, from $9.07 per pound to $8.20 per pound according to Circana data. With these margins, the discounted price averaged $7.24 per pound to the end of May, or nearly 12% below January 2023.
Frozen salmon imports down close to 20 percent
The April import figures have been unveiled, showing a notable decline in frozen salmon imports, down nearly 20 percent compared to the same period last year. Year-to-date, total frozen salmon imports have plummeted by 19.5 percent. Looking at a month-to-month comparison, April’s imports have decreased by 19.6 percent compared to March 2024.
Chile, historically a dominant player in this category, is experiencing a decline in market share, now holding only 63 percent of the frozen salmon market. Meanwhile, Norway maintains a 21 percent share, with an additional 11 percent contributed by processing countries such as Poland, the Netherlands, and Germany. When these processing countries are combined with Norway, their collective market share increases to around 32 percent, up from 30 percent in 2023.
Analyzing the 3-year average, it’s evident that frozen salmon imports have consistently fallen below this benchmark for the past 7 months (October 2023- April 2024). Moreover, 2024 marks the lowest import levels observed in the first four months of the year over the past three years.
Despite lower import volumes, demand for frozen salmon remains relatively stable, with fair to moderate pricing reported. However, pricing for 4-ounce portions has shown some volatility, with fluctuations in both higher and lower offers noted. Market participants highlight a trend of Chilean suppliers shifting towards processing fresh salmon for the spot market while pricing out of Europe remains steady for frozen salmon portions.
Ground beef at retail picking up steam in 2024
Ground beef prices remained generally sideways for much of 2023, where other beef items found much of the spotlight amid solid demand for all muscle cuts. The macro-environment has been more challenging this year and consumers are being more selective according to the retail conversations.
It has been observed that many consumers trade down within beef as opposed to trading into other categories, despite conventional thinking otherwise. Looking at Circana data, this would appear to be the case as retailers look to provide a versatile and valuable item. Fresh ground beef 78-94 percent lean averaged $4.13 per pound to the end of May, and quickly jumped to $4.58 per pound in the first week of June in preparation for Father’s Day, with sale prices of $3.49 per pound and $3.94 per pound, respectively. The former figures were 25% higher than the start of 2023 on regular pricing, and 30% higher on discounted ads. Total sales in the last week of May were $64 million compared to $38 million in the first week of 2023. The tally was the second-highest weekly sales figure in the period.
Imported lamb fills the gap
When analyzing the USDA National Weekly Volume for Lamb Cuts – Imported Product – Negotiated Sales – Fresh and Frozen, we can observe significant trends compared to past years’ data. For the week of June 3, 2024, year-to-date total volumes for fresh material were up 19% compared to this same time last year. This increase marks the largest year-to-date total since data collection began in 2005. On the frozen side, year-to-date total volumes were 5% higher than this same time last year, making it the second-largest frozen volume, just below 2018 levels by 2.4%.
When examining year-to-date harvest figures per head for lamb since data collection began in 1990, levels were at 2,420,000 head. Most recent year-to-date total figures stand at 856,084 head, marking a 64.6% decrease over a 34-year span.
The increase in imported lamb, both fresh and frozen cuts, is primarily due to the decline in domestic lamb slaughter over the years and the relatively shrinking interest in lamb products in the U.S. This demand is mostly concentrated around specific holidays and ethnic groups. In the U.S., lamb is commonly consumed during holidays such as Easter, Passover, Christmas, and Muslim holidays.
The significant reduction in domestic lamb production has created a gap that imported lamb is now filling. As domestic production decreases, reliance on imported lamb grows, leading to a substantial increase in imported volumes. Consumers’ changing preferences and the evolving meat industry further influence these trends. With domestic supply declining and imports rising, the U.S. lamb market dynamics are shifting, reflecting broader changes in agricultural and consumer behavior throughout the years.
Muted buying interest for German pork cuts
Buying interest on the spot market across German pork cuts has been reported as lackluster during the week. Several market sources indicated that buying interest dropped below seasonal expectations following the strong start to the grilling season during early May. However, recent mixed weather conditions limit the buying interest from the retail sector, additionally, small retail promotions have been reported thus far, for grilling items, further reducing the demand. While buying interest remains limited, supply has been reported as sufficient across the cuts, with a steady stream of live pigs and stable slaughter weights reported by market participants.
Written by Jake Mills-Zivanovic
