Our favourite beef export price gauge has maintained its record run so far this year, driven by less lean beef supply in the US and a falling Australian dollar. The 90CL - the US imported lean beef price indicator - broke the AUS$10/kg mark for the first time in December and had reached $10.60/kg by the end of January. And just last week, according to the Meat and Livestock Australia chart, it looked to have reached a 25 year high in US terms of US304c/lb.
The domestic US supply situation is one we’ve been talking about for over 12 months now, with the early 2024 herd numbers falling to their lowest since the 1950s last year following several consecutive seasons of drought. The Steiner Group’s latest report forecasts cow slaughter to fall another 7% year-on-year in 2025, which would make it 23% less than three years prior, and they expect domestic cow meat (which is Australia’s key market in the US) to remain limited. Actual total cattle slaughter in the US for the week ending Feb 15 was more than 47,000 head lower year-on-year. The latest US female slaughter rate data from October 2024 had it still close to 50%, well above the 47% level that would indicate the herd has moved into a true rebuilding phase.
Domestic beef returns in the US have also been dragging the import price higher, with their differing cow indicators currently trading at 23% to 35% stronger than year-ago levels, with the 90% lean cows in competition with imports at the highest year-on-year premium. The CME Feeder Cattle, while having come back from record highs reached in the middle of 2024, are still trending nearly 13% above the same time last year.
We looked at Australia’s beef exports for January last week (read here), which showed volumes to the US were up 22% year-on-year. Going off of the first two weeks of February, Steiner predicts February volumes to the US will be 62% higher than last year. The domestic shortfall means the US is offering a premium price to our Asian markets, and President Trump is yet to roll out any new tariffs on beef. But we aren’t the only exporter with ample supply cashing in on the US demand, with the New Zealand cow slaughter rising in the autumn and South American exporters taking advantage of the high price to continue to send beef out of quota.
Year-on-year, our national cow indicator is 4% stronger compared to the 90CL, which has lifted 27%. The cow price closed January at 492¢/kg, which put the 90CL price at a 115% premium. At the same time last year, this differential was only about 70%. Historically, if we disregard the domestic disaster, which was the 2023-24FY season, we have to go back to 2019 and our drought-induced turn-off to see premiums above the 50% mark. Before that, 2014 has been the only other period in that territory in the past two decades – which was the last time US cattle numbers were at their cyclical low.
What does it mean?
The 90CL premium to our domestic cow price being at historical highs should indicate that there will be limited further downside to that indicator, especially as US demand is expected to increase even further this year. On the flip side, our domestic slaughter remains in record territory, but rainfall in northern Australia has bolstered Restocker markets this week, and if the season plays out well for cattle producers it should stop any significant female turnoff surge over and above the current liquidation phase.
Key Points
- US imported lean beef price, the 90CL, has continued its record run this year, ending January at 1060¢/kg.
- Cow slaughter in the US is expected to keep declining, supporting demand for imported lean beef.
- Rainfall in the north and the strong export price should support cow prices despite the current liquidation phase.
Click on figure to expand
Click on figure to expand
Data sources: Mecardo; Meat and Livestock Australia; Steiner Consulting Group
