THERE are no significant signs yet of Australian slaughter cow prices or lean manufacturing beef prices being negatively impacted by uncertainty surrounding the prospect of US import tariffs on our beef.

As reported last week, there’s a great deal of uncertainty around what happens after 2 April (3 April, Australian time), when US President Donald Trump’s next round of tariff measures are due to be announced.

But as of Friday, little if any of that is yet being seen in cattle or meat pricing in Australia.

Thursday’s weekly 90CL imported cow trimmings price into the US was quoted at A$10.91/kg, up another 6c/kg on the previous week.

That did carry a bit of currency factor, with the A$ dropping US1c in a matter of days last week. But it shows there has been no significant tariff speculation impact yet on grinding meat prices – in fact they have continued to edge to new record highs over the past fortnight.

Meat trade contacts this morning said the export trimmings market had now stabilised after earlier sharp rises, but had not yet shown signs of decline. They noted that the US industry does not start its current working week until later this evening, Australian time.

There’s been some talk in trade and analyst circles last week that for Australian beef currently on the water that would arrive after Trump’s 2 April tariff announcements, that deals would be done to ‘share’ any additional tariff burden equally between the importer, exporter and the US end-user. For shipments after 2 April, the importer would bear the full cost of any tariff.

Two large Australian export processors told Beef Central that they had been approached over such an arrangement, but had rejected it. They said they could not believe that any Australian exporter would agree to such terms.

“It would be like an Australian exporter who copped big demurrage fees on container vessels while the Brisbane Port was shut during this month’s Cyclone asking the importer to pay some of the cost on that,” one exporter said. “It’s just the cost of doing business.”

“We would never enter into any deals on that basis, given that it is an import tariff, not an export tariff,” one contact said.

“The American people voted to elect Trump, partly on an agenda to lift tariffs, so the importers will be paying the tariff and passing it on to the US consumers, who voted for Trump’s policies,” he said.

Timing would be a factor in any tariff developments next week, he said.

Even if Australia is penalised with a beef tariff on 2 April, it may not come into force until a month, or two/three months later.

“If there is to be a tariff applied, when it is enacted will become critical, for trading partners to work out arrangements,” one contact said. “Is it based on a shipment date, or a customs clearing date? There are just so many unknowns still to be sorted out.”

Given the typical 30-day transit time for Australian beef to the US, the 2 April tariff deadline means product shipped as far back as late February could still be caught up in the tariff issue.

“Some of that delay in activating any tariff may be designed to allow trading partners like Australia to try to offer ‘trade-offs’ on other access or trade deals of value to the US,” one exporter said.

Uncertainty

Given that 2 April is now little more than a week away, some trade sources suggested that regardless of whether a US import tariff is applied on Australian beef or not, it would at least take away some of the uncertainty that currently exists in export trading circles.

“The US itself has provided no clarification on issues like these. In Australia, the Federal Government, and government trade personnel have said little about the likely outcomes next week, for one reason: nobody knows,” one trading desk contact said.

“All that can be said right now is that there is a lot of rumour and supposition flying around, which is creating uncertainty, and increasing the risk to the trade to the US. It’s affecting the sentiment among both buyers and sellers – creating a risk that wasn’t there a month or two ago.”

Prices into the US had not changed much over the past week or so, but volumes were under pressure, the trader said.

“Buyers are nervous to commit to big licks of volume, when they just don’t know if the price they have just paid may be hiked-up after 2 April due to a tariff they did not know about.”

“So the sooner we get to April 2 the better, to provide some clearer signals,” the trader said.

Another export processor told Beef Central that in his opinion, slaughter cow prices in Australia would not ‘fall out of bed’ next week – unless the US unexpectedly imposed some ‘massive 25pc tariff’ on Australian product.

“Two things could happen next week. Australia be subjected to a tariff of say, 8-10pc, at least providing some clarity about trading conditions going forward. Or Australian beef is not included at all in announcements next week, and the uncertainty continues.”

“If there is prolonged import uncertainty, then some of the US importers who have not been buying their full quota to maintain obligations to end users will see supply in the US shorten-up further. In theory, that should raise demand and price for Australian beef, given that the US is becoming increasingly reliant on imported trimmings and beef in general.

He saw a possible scenario where (using an example only) a 10pc tariff would see bids from the US on lean 90s trimmings drop from say, US310c/lb to 270c for a short period, in an attempt to offset the impact of the tariff.

“If Japan was bidding, say, 295c/lb at the same time, we might end up selling more trimmings to Japan, Korea and other places,” he said.

“That, in turn, would see the supply of lean product going into the US start to drop, forcing US bids to rise. Maybe, a month or two after a 10pc tariff is set, we would see a US bids that had started at 310, before falling to 270, go back up to 320-330, to fill the void. But in this scenario, it would still have the 10pc tariff on it.”

Another theory going about the beef industry this week is that tariff announcements on 2 April will relate to countries (like China, Mexico, Canada, Japan) that have large trade deficits with the US. Countries like Australia, which enjoys a large trade surplus with the US, may be left out altogether, or delayed.

US view

US analyst Len Steiner’s latest imported beef market report (dated 21 March) says the imported beef market inbto the US continued to have a firm undertone last week, as trade assessments and reciprocal tariff threats have added significant uncertainty and, in some cases, have severely limited offerings for product delivering in May and June.

“Importers are facing increased risk and are either pricing some of this into their offerings or, more commonly, limiting what they are willing to show. Country of origin is also playing a role, with South American product viewed as carrying higher risk for trade disruptions,” Mr Steiner said.

Last week, the US National Cattlemen’s Beef Association renewed its calls for the US administration to halt beef imports from Brazil and Paraguay due to concerns over Foot-and-Mouth Disease – a request that has been made repeatedly in the past. There have also been calls to restrict Australian access unless or until Australia ‘opens its market’ to US beef.

“The prospect of higher tariffs and non-tariff barriers has importers on edge, further constraining supply at a time when domestic cow meat availability is expected to decline,” Mr Steiner said.

Adding to the upward pressure on imported beef prices was the recent surge in fed cattle prices and fears of higher wholesale beef prices in April and May, as spring demand kicks into full gear.

Lean beef market in context

Currently, imported lean grinding beef (90CL) is trading as much as US60c/lb below domestic US product, offering a 22c/lb advantage to domestic beef manufacturers producing a 75CL meat block with a 35pc imported beef inclusion, Mr Steiner said.

“Much attention is being paid to whether domestic 90CL beef could reach US$400/cwt this year and whether the market can sustain such levels.

“For retail and especially food service operators, the value of 90CL beef should be considered within the broader context of its use in meat blocks. Additionally, historical comparisons—such as to prices 10 or 15 years ago—must account for inflation. Currently, the value of the 75CL meat block is hovering around US$281/cwt (based on $382 for 90CL fresh and $114 for 50CL fresh). This is 15pc higher than a year ago but still well below the inflation-adjusted highs seen in 2014–15.

“If 90CL climbs to $400/cwt and 50CL reaches $150/cwt, the meat block would be valued at just over $305/ cwt—matching those inflation-adjusted peaks,” Mr Steiner said.

Given this possibility, beef manufacturers are likely to be incentivised to extend their forward positions. This is also why any discussion of suspensions or non-tariff barriers remains a major source of concern.”