Both Tyson and JBS, the top two beef processors in the US, announced reduced profits recently for the quarter ending in June 2022.

Their beef businesses continued to be extremely profitable, but the comparison has to be made with results for the same period in 2021 and early 2022.

Tyson acknowledged this by attributing $480m (€470m) to increased cattle purchase costs in what can be described as a realignment in favour of farmer and rancher suppliers.

Cattle prices in the US are currently trading around the equivalent of $2.30 per pound (lb), which is the equivalent of €5/kg for carcasses with a 60% kill-out percentage, which is typically 5% higher than in Ireland.

This time last year, the price factories were paying for cattle was $2/lb, which converted to the equivalent of €3.76/kg using the exchange rate in place this time last year.

Notwithstanding the strengthening of the dollar against the euro, this is an exceptional transformation in US beef prices.

US cattle prices

Low farmgate prices translated to record factory profits a year ago and up until the second quarter of 2022, when US cattle prices increased in line or, in cases, ahead of what is paid in Europe.

Parallel to this improvement in prices paid by factories to US farmers is the exceptional growth in volume and values of US beef to international markets, especially in Asia, the Middle East and north Africa.

Admittedly, Irish beef doesn’t currently have access to China, nor approval for South Korea, but we are approved for Japan.

While this has been a growing market for Irish beef, quantities remain tiny compared with what the US supplies or what Irish factories sell in the UK and Europe.

With a higher cattle price in the US, we can surely expect that Irish factories will make greater inroads in the Japanese market given its now-competitive cattle price position.

Pressure on US supply

Drought across much of the US has caused increased cow culling this year and while this has increased the current beef supply, the expectation is that cattle will be scarce for 2023 and 2024.

This is reflected in US cattle futures values, with prices for the first half of 2023 10% higher than they are at present.

This view is also shared in the US processing sector, with an expectation that cattle purchase prices for them will increase further.

Impact on Irish beef

This has to be a positive development for Irish beef. The US is the second-largest beef exporter by volume in the world after Brazil and is regarded as the premium supplier of grain-fed beef in the highest-value Asian markets.

With higher cattle prices expected in the US, Irish beef surely has to be an attractive proposition for Japanese buyers and perhaps other countries such as China, Vietnam and South Korea will open their markets to Ireland as an alternative supplier to compliment the dairy and pigmeat already supplied.

The Government will lead a trade mission to the area at the start of next month and this is taking place at what should be a favourable time for developing beef markets.

However, as always with such missions, the success has to be judged on the results and these are the volume and value of sales to the area in subsequent months and years.