THE massive fuel price hikes seen across the world over the past month are now being reflected in consumers’ discretionary spending on beef, export meat traders told Beef Central this morning.

Demand out of the United States for Australian frozen lean manufacturing meat used for hamburgers has softened a little in recent weeks, and the combination of heavy supply out of Australia and Brazil, plus the consumer budget impact from fuel prices are seen as primary contributors to that.

“The fuel inflation cycle has been in place a month or so now, and it is clearly starting to bite – both here among Australian consumers and overseas in markets like the US,” a senior export meat trader said.

Reports out of the US overnight suggested that President Donald Trump thinks the blockade of the Strait of Hormuz will now continue until at least August, only adding to fuel access and price concerns.

Only yesterday, red meat topped the list of CPI contributors to food price inflation in Australia, rising 11.8pc year-on-year during March. Coffee was next, rising 10.7pc.

“We are seeing a little bit of a dip in some of the imported trimmings values into the US – even as the domestically-produced fresh 90s (now in very tight supply due to the low US herd) have held up,” the trader said.

Imported 90s have softened perhaps US5-10c/lb in recent weeks.

“But dips like this happen from time to time. Markets don’t go in one direction forever,” he said.

“That spread between imported and domestic fresh and frozen has not changed much – it’s still around US60c/lb – but it’s more that the current importer bids for product being sold today has come off from where it was a couple of weeks ago,” the trader said.

US beef reserves remain low

Another feature presently in the US is that beef importers remained ‘very current,’ he said. US cold storage inventory numbers came out this week, showing March volumes down about 4pc year-on-year.

“Even though huge volumes of imported meat are arriving in the US this year, the inventory in cold storage is well down on last year. Whatever they are bringing in, they are getting rid of, and them some,” he said.

The US domestic beef kill last week was only 529,000 head, and 514,000 the week before that – down from 555,000 or more this time a year ago and 620,000 in 2024.

“Fundamentally, the whole lack of supply situation in the US has not changed, despite the volume of imports that are arriving,” the export trader said.

April Australian export figures available early next week should add to that story.

“But there’s been a pushback on the US consumer demand side, driven by food inflation, petrol inflation and general cost of living rises.”

“If the average US or Australian consumer is spending 15pc more of their budget on fuel, it means they are spending 15pc less on something else.”

Currency factor?

While the A$ value had risen about US 2.5c against the US$ over the past month, that was not yet a significant factor in trading patterns.

‘US demand has definitely slowed a a little due to inflation, and there is still plenty of meat coming into the US from both South America and Australia. Australia had its largest beef kill in 11 years only a fortnight ago, because of the combination of drought in regions of NSW, and big herd and cattle availability in Queensland, with some six-day weekly processing operations happening.”

With common thinking in terms of Australia’s trigger-date for out 2026 quota to China being around mid-to-late June, more product is likely to be pushed towards big customers like the US from July onwards this year, traders suggest. Hastening that will be the improved access for some Australian beef processors this month, with two additional plants (Nolan Meats in Queensland, and Thomas Foods International in South Australia) gaining China access, and 14 existing license holders (names not yet made public) advancing from frozen only to chilled.

Apart from the China Safeguard, Australia also faces a Safeguard issue in Korea, where out quota is likely to be reached around late July, pushing out of quota shipments up another 24pc.

From August on, that is only likely to direct further export product towards North America, Beef Central was told.

“But once the US market his the middle of the northern hemisphere summer (Memorial Day, followed by 4 July), beef demand tends to decline somewhat,” a Queensland trade source said.

On Aussie dollar terms, frozen 90s into the US are this week worth around $12/kg CIF delivered to a US port, and $11.50/kg FOB in Australia.

At those levels, are there more whole imported muscle cuts going into the grind in the US?

“Not that many,” the trader said. Chuck tenders and knuckles that can typically go into the grind when prices make sense, are still worth more than that, so they go elsewhere. Insco’s today are worth $13.25 CIF – still a dollar above imported 90CL – and flats are less than that, but still at least A70c/kg above 90CL value.”

Steiner’s most recent weekly imported US beef price report published Friday suggested the increase in availability from most imported beef suppliers to the US resulted in some downward pressure for lean imported manufacturing beef.

“Discounts for imported lean are following the historical trend: Given the shortfall in US lean beef supply, some may think imported spread to domestic should be tighter,” Steiner’s commentary said.

“But it is domestic fresh – not imported lean – that’s in short supply. These products are not exactly interchangeable, hence the widening spread.”

Imported continued to trade at a significant discount to domestic product last week, Steiner said, reflecting the surge in supply from Australian/NZ and South America.

“Last week the spread between domestic fresh and imported frozen 90CL was near US60c/lb or 15pc. This is as low as the spread was last year, but historically the spread has been even wider,” the report said.

Reports out of the US suggest a delegation of Brazilian beef exporters visited the White House last week, seeking relief from the current Trump tariff impact. Brazil continues to pay 27pc tariff on exports to the US under the small ‘Other Country’ quota, compared with Australia’s and Argentina’s 10pc. Little headway was made, reports suggest.

“If the US market thought Brazil might have been successful with that lobby, it’s likely that they would have held back on buying, hoping for cheaper prices as an outcome – but it didn’t happen,” a trade source said.

Steiner’s weekly report from last Friday said rumours about re-entry of Mexican cattle (currently banned due to the risk of New World Screwworm fly) continue, even as the infestation in Mexico was “as bad as it has ever been.”

“Cattle futures have been especially volatile, as market participants consider the possibility and impact this may have on US cattle prices,” Steiner said.