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TheBeefSite Newsletter - 22 January 2014

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TheBeefSite
Wednesday 22nd January 2014.
Michael Priestley - Editor

Michael Priestley
Editor


Novus International

MSD Animal Health

Why The Spike In US Beef?

Historical beef and cattle highs have been reported across the US and, although not a huge surprise, have been more intense than anticipated.

USDA figures have reported beef cutout at $236.56/cwt and cattle at $144/cwt in the last week, leading some analysts to think the market must be “overdone”.

Analysts and traders have been particularly startled by developments over the last week, which Missouri experts Ron Plain and Scott Brown said ‘blew away’ record highs.

Last week, University of Mississippi Professor, John Michael Riley underlined the significance of the current price event and the ‘trepidation’ it can cause.

The main reason behind the trend is partly due to a combination of the long term supply effects of herd liquidation from the 2012 drought and the short term impact of the polar vortex earlier this month.

Regarding the 2012 drought, TheBeefSite analyst Jim Wyckoff said: “We are in an upcycle right now, and while some people suggest we are at a market top, there have not been many technical clues to suggest such yet.”

Going forward, Mr Wyckoff said he expects the market to trend sideways or higher until bearish clues surface.

The icy blast, which arrived on 2 January for many, disrupted cattle transportation and fattening when a nine day polar vortex brought record lows for the Midwest of -20 F (-29C).

Keeping cattle alive became the priority instead of weight gain and while this compounded the supply problem, experts have suggested inelastic demand and short covering are also at work.

In their daily livestock report, Dr Steve Meyer of Paragon economics and Len Steiner, Steiner Consulting Group, said: “We think this is a classic case of inelastic demand meeting a shrinking supply, with a dose of short covering panic thrown in for good measure.”

“We think demand is inelastic in the short term because this is the time of year when retailers tend to transition from holiday items, such as hams, turkeys and rib roasts, to more normal fare,” said the pair.

“There is also the tendency to plan based on last year’s performance and retailers remembered when beef prices dropped sharply between January and March of 2013.”

Additionally, there are packers making more from sales, the pair added.

With large beef quantities already committed, Dr Meyer explained that packers have more power in negotiations.

Retailers in the meanwhile could have to ‘take the price hit’ and hope to recover come spring.

Dr Meyer and Mr Steiner stressed the price surge, combined with a strong US dollar, ‘does not bode well for exports’.


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This Week's Articles and Analysis

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Problem of Food Waste – Food for Thought
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Market Reports

EBLEX Cattle Weekly - 17 January 2014
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Global Beef Industry News

   United States

Cattle Futures: April Live Cattle Finish At $140.22
Allendale Inc. Releases Cattle on Feed, Cold Storage Estimates
Explosion Wrecks Animal Feed Plant
CME: Beef, Pork Take Opposite Turns in Terms of Revenues
Novus Honored as 2014 Corporate Science Leadership Award Recipient
Cautious Optimism Following Omnibus Spending Bill Passage
Weekly Cattle Outlook: Record Week For Beef Sees Choice Carcasses up $40 on Year Ago
Future of Animal Agriculture to be Debated at NIAA Event
Cattle Futures: Sideways and Higher Prices Possible Near Term, Thursday
Dietary Beef Guidelines Move Towards Change
Nashville Cattle Convention to Break Records
Getting More From Your Slurry And Fewer Complaints
Cattle Futures: Near Contracts At Record Highs, Wednesday
NFU Women’s Conference Provides Skills, Guidance to Participants
Daily Dairy Trading: Class III Posts Further Gains, Tuesday
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Cattle Futures: February Closes Up $1, Tuesday
Wyckoff's Weekly Cattle Outlook: Record US Cattle Prices

   China

China Reports Drop in Food Price
Chinese Food Prices Rise With Beef Edging Higher

   Global

How Can Global Food Security be Achieved?
Date Set for US-Canada COOL Hearing
Best Ways to Produce More, Using Less

   Germany

Water Stewardship – Key to Food Security
Resilient Farming Systems to Eradicate Hunger
Call for Agricultural Action to Fight Global Hunger
Biofuels Benefits Highlighted at Berlin Green Week
German BSE Outbreak Confirmed
Scientists Find Fleckvieh Bull Infertility Gene
Carbapenemase-producing Germs in Livestock Populations

   Denmark

Effective Danish Effort to Reduce Use of Antibiotics

   Colombia

Hardy Buffalo Herd is 'Production Advantage' For Colombia

   United Kingdom

New 16 Month Bull Penalty Could Affect Finishing Methods
Northern Irish Beef Trade Back Slightly
Programme Announced for UK Animal Welfare Conference
Scots To Get Rough Treatment From European Regulations
Union Builds on Consumer Demand for Scottish Meat
Call for All Farm Animals to be Stunned Before Slaughter
Protecting Our Water, Soil and Air
Northern Ireland's Cattle Slaughter Back Slightly on 2012

   Australia

Applications Open for Concessional Farm Loans

   Russian Federation

Russian Show to Feature Modern Reproductive Technologies
Russia Bans Beef By-products from Australia
Russia Could Place Embargoes on Norwegian Meat and Dairy

   Finland

Bluetongue Antibodies Identified in Finnish Beef

   European Union

European Parliament to Hold Vote on Animal Health
European Parliament Calls for Crack Down on Food Fraud
Europe Satisfies Taste for Grain Fed Australian Beef

   Malaysia

Malaysian Consumer Group Calls for Ban on Antibiotics in Animal Feed

   New Zealand

Weevil Control Wasp Must Head West

   Ireland

New President Sets Out Key Priorities for Irish Farmers

   Argentina

National Laboratory Declared Brucellosis Reference Centre

   Israel

New Foot and Mouth Confirmed Near Nazareth

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