US beef exports were expected to grow for a second year, as shipments to South Korea, Japan and Mexico increase, the USDA’s Foreign Agricultural Service, Office of Global Analysis, said in its monthly report of World Markets and Trade.
Lower production in Australia as the herd there is grown “will reduce exportable supplies and thus increase demand for US beef in Asian markets where the two exporters compete fiercely for market share,” the report said.
The relative strength of the US dollar is problematic for some markets, but declining wholesale beef prices was expected to offset some or all of this and increase competitiveness for US beef in world markets.
GLOBAL PRODUCTION GROWING
Global beef production is expanding among major traders as US and South American cattle supplies increase, the report said.
Brazilian production was expected to rise in response to this increase in export demand. Brazil’s market presence was supported by a relatively weak currency and market access improvements in China, Saudi Arabia and the US.
Argentine production was expected to grow at a modest pace as liberalization of the currency regime and removal of export taxes encourage producers to rebuild herds and increase carcass weights, the FAS said in the report.
Conversely, Australia’s beef production is liable to decrease as heifers are held for breeding instead of being fattened to market weight and sold to packers. A rainy 2016 has renewed drought-stricken pastures and encouraged the herd rebuilding efforts.
That was expected to open a door of opportunity to US beef exporters next year. As Australian cattle producers regroup, the US herd is expanding from its own cyclical low and is poised for its second straight year of rising production. Exports were expected to follow.
WORLD BEEF EXPORTS SEEN UP 3%
The FAS report said beef exports by major traders were expected to rise by 3% to 9.7 million short tons on gains in shipments to Asia.
China was seen retaining its role as “the fastest growing market for beef, reflecting the reopening of its market to Argentina and Brazil.” China’s per-capita beef consumption remains far lower than for pork or poultry, but stable domestic production and a preference for imported product continues to “incentivize” imports, the report said.
Growth in beef sales to China has enabled Brazil to become the world’s top global exporter, FAS said.
Aside from China, beef demand remains strong in South Korea and to a lesser extent Japan as demographic changes and domestic policies have resulted in declining domestic production, the report said.
Other top beef import markets, including Russia and Egypt were expected to remain stable in 2017 as economic growth remains sluggish, and weak currencies hamper imports.
CASH CATTLE MARKETS QUIET
Cash cattle markets Thursday remained quiet bids at $98 per and offers at $100 to $102 on a live basis and dressed-basis trades from Wednesday reported at $154. Most offers were holding at $156 to $158.
Wednesday’s Superior Fed Cattle Exchange sold cattle at $97.75 per cwt to $99.75 with most around $98 to $98.50.
Cash markets last week traded lower at $98 per cwt live, down $4 to $5 from the previous week, and at $152 to $156 dressed, down $6.
The USDA’s choice cutout Thursday was $0.55 per cwt lower at $177.89, while select was off $1.85 at $167.74. The choice/select spread widened to $10.15 from $8.85 with 98 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Wednesday was $119.97 per cwt, down $0.61. This compares with Thursday’s Oct settlement of $121.75, up $2.72.