A prominent university agricultural economist is predicting expanded US beef exports and leaner beef imports this year, making for stronger fed cattle markets at home.
Oklahoma State University Agricultural Economist Derrell Peel said in a letter to Extension Agents called Cow/Calf Corner that 2020 beef exports could increase with better prospects in China. US beef imports could decline a bit as Australia’s beef output declines.
China has seen growing beef demand in general and lowered protein supplies because of extensive hog culls to control African Swine Fever, he said.
However, reduced exports to Hong Kong may offset at least some of the growing beef exports to mainland China as trade flows into China become recognized officially, Peel said.
Additionally, the bilateral trade deal with Japan mostly restores US beef’s competitive position there that was lost with the US’ withdrawal from the Trans-Pacific Partnership, he said. It is expected to slow or halt the 2019 erosion in beef exports to the largest market for US beef.
Australia was expected to see reduced beef production and exports, which will reduce exports to the US and other global markets, he said. It also may allow the US to surpass Australia as the third largest beef exporting country.
The US also may see reduced beef imports as several major beef exporting countries like New Zealand redirect increasing amounts of beef to China, which continues to dominate global beef trade, Peel said.
A LOOK BACK
Beef exports last year were down 4.4% from 2018 to most major destinations including Japan (-10.0%); Hong Kong (-24.7%); Mexico (-5.4%) and Canada (-10.6%), Peel said. Among major markets, only South Korea was up 7.1% year over year.
Japan accounted for the largest share of 2019 beef exports at 26.4%, he said. South Korea is the second largest US market with 22.6% of total exports.
Number three market Mexico represented 14.0% of beef exports, and Canada was fourth at 8.9% followed closely by Hong Kong with 7.7%, Peel said. The top five markets along with Taiwan at 5.8% represented 86.1% of total exports.
Beef exports to China increased in the second half of 2019 bringing the total for the year to a 1.1% share of the total.
US beef imports increased 2.0% year over year in 2019, he said. Imports were 7.0% higher from Canada and represented 27.7% of total imports.
Number two beef import source Australia increased 6.5% and was 23.4% of the total, Peel said. Mexico was the third largest source of beef imports, up 14.1% and accounting for 19.0% of the total.
New Zealand was the fourth largest source of beef imports at 13.1% but was down 29.9% year over year, he said.
Total cattle imports increased 7.6% in 2019, Peel said. This includes a 2.7% increase in feeder cattle from Mexico and Canada and a 25.5% increase in cattle for slaughter from Canada.
CATTLE, BEEF RECAP
Cash cattle trading took place in the Plains this week at $119 to $120 per cwt on a live basis, down $1 to $2 from last week. Dressed-basis trading was at $190, down $2 to $3.
The USDA choice cutout Wednesday was down $1.52 per cwt at $206.31, while select was up $0.77 at $205.30. The choice/select spread narrowed to $1.01 from $3.30 with 102 loads of fabricated product sold into the spot market.
No live cattle futures contracts were tendered for delivery Wednesday.
The CME Feeder Cattle index for the seven days ended Tuesday was $140.98 per cwt, up $0.31. This compares with Wednesday’s Mar contract settlement of $135.05, up $0.37.