Canadian beef gets a larger market share in the US
Canadian beef imports hit a high this spring in the US, with April 2021 being the largest April in 10 years. The comparison to April 2020 is big, up 62%. Big volumes this spring are comparable to Canadian beef import volumes during the spring months in 2020, 2019 and 2010 (USDA; carcass weight basis). The beef demand pull in the US comes from both American consumers and from consumers in South Korea, China and Southeast Asia, who are drawing beef exports out of the US.
From January through April 2021, Canadian beef imports were up 3% in volume from 2019, reaching the highest year-to-date volume since 2007. While the biggest April 2021 export volumes went to South Korea (67 million pounds; 30,499 tonnes), big volumes are going to China as well. Over the last 20 years, the US has exported an average of 15 million pounds of beef to China annually. January to April 2021, the US exported nearly 10 times that much with 139 million pounds going to China (USDA; carcass weight basis).
Retail prices rise
Grocers seem comfortable that the US consumer is willing to pay more for beef this spring compared to other proteins. The all-fresh retail beef price increased 3.9% from April to May to US$6.73/lb (CDN$14.85/kg). This is the second-highest price on record since 2008, down just 4.4% from the May 2020 record price.
The price in May 2021 was 14% higher than May 2019, representing a significant increase from pre-pandemic pricing. The beef price increases compared to chicken and pork are large. The May 2021 retail chicken price was up 8.3% from May 2019, but the retail pork price was steady with May 2019 (0.2%).
Food service drives wholesale rally
The return of foodservice in the US is helping to drive the wholesale beef rally this spring. Compared with March 2019, March 2021 major chain restaurant transactions were down 6% and quick service restaurant chain transactions were down 5% and very close to pre-pandemic levels. In the US, transactions have steadily improved month-over-month since restaurants were shut and then reopened last year.
The US Choice cut-out was US$317.59/cwt (CDN$384.97/cwt) in May 2021, with the Select cut-out at US$296.31/cwt (CDN$359.19/cwt). Both Choice (-24.4%) and Select (-25.8% values were 25% lower than May 2020. Excluding May 2020, the Choice cut-out was at its highest price in five years and the Select cut-out was at its highest value on record (since 2004).
There is competition in the market that is driving up the cut-out price with the Choice rib primal being in the driver’s seat. The Choice rib was the only primal to rally higher this May versus last. The Choice rib primal moved up to US$545.83/cwt (CDN$661.77/ cwt) as of June 11, 2021 to a new record high (since 2004). There were sincere efforts amongst the remaining primals to meet last year’s price heights, but values were headed down in the second week of June before that could happen. The Choice brisket made a welcome return this April when it finally pushed past 2019 values.
At US$296.53/cwt (CDN$359.52/cwt) in May 2021, it seems the brisket had peaked at the second-highest price on record.
Canada and Mexico backfill US market
Total US beef imports in April 2021 were up 1.5% from April 2020. Imports from Australia were down 37% from April 2020 and down 43% (12,246 tonnes) from the five-year average for April.
Canada and Brazil have stepped in to offset the decline. Beef imports in April 2021 were up from Canada (+62%) and Brazil (+130%), but down from New Zealand (-26%), Argentina (-23%) and Mexico (-3.0%), compared with April 2020. The protein pulls from African swine fever and the US Phase One Trade Deal with China are gathering strength over North American beef trade flows. Total US beef exports in April 2021 were up 22% from April 2020, with Canada and Mexico adding product to backfill the US market.
(Aricle by Robyn Paddison)
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