US manufacturing beef prices continued to post strong gains on the back of tight import supplies. The supply of lean beef in the US spot market has reportedly reached critically low levels as processors rushed to build inventory ahead of the Independence Holiday on July 4. Beef prices retained the recent uptrend with the boxed beef cutout value for Choice closing up 3% w/w and 24% y/y at US$244.39/cwt. The Select carcass cutout prices gained 3% w/w and 27% y/y to close at US$237.83/cwt.
Feeder cattle prices continued to post strong gains which saw the CME Feeder Cattle Index closing up 4% w/w and 55% y/y at US$213.37/cwt. The weekly US cattle slaughtered totaled 615,000 head, slightly up w/w but still down 6% y/y. The total cattle slaughtered for the year to date reached 14.85m head, which is down by 6% y/y. The US feedlot cattle and calves for the slaughter market slowed by 2% y/y on June 1 to 10.6m head, according to the latest USDA Cattle on Feed report. This relates to feedlots with capacity of 1,000 or more head. Placements in feedlots dropped 7% during May to 1.91m head.
In Australia, herd liquidation has reportedly continued over the past 22 months as a result of drought conditions across the producing areas. The increased slaughter particularly of the female cattle is expected to continue in the short to medium term and only slow down when feed conditions improve and herd rebuilding resumes. The strong demand and tight supplies of breeding cattle for herd rebuilding will boost beef prices in the longer term. The benchmark Eastern Young Cattle Indicator (EYCI) advanced marginally to AU$3.36/kg cwt, up 5% y/y.
Domestic (South Africa)
Beef prices bottomed out and finished slight to moderately higher on the back of tight supplies and improved uptake. Weekly Class A beef prices ended firmer at R33.25 per kg, up 21% y/y.
Contract Class A beef prices were marginally higher at R33.71 per kg, up 23% y/y. Class C beef finished modestly higher w/w at R24.83 per kg and up 13% y/y. In the weaner market, prices continued to strengthen on the back of tight supplies. Weekly weaner calf prices increased by 2% w/w and 21% y/y at R17.70 per kg live weight.
Prices are expected to rebound slightly in the short-term on tight supplies, but the medium term outlook remains bearish on slowdown in demand.