Beef Export Needs Rising

US beef exports are becoming increasingly important as the herd and beef production grows, and while projections show cross-border shipments keeping pace, the market is vulnerable.

Annual beef export volume, at 2.540 billion pounds, accounted for 9.8% of total production for the five-year period from 2010-2014, according to data from the USDA’s Economic Research Service and the Foreign Agricultural Service.

For 2015, beef exports of 2.266 billion pounds made up 9.5% of annual production, and in 2016 and 2017 exports as a percent of production are forecast by the Livestock Marketing Information Center at 9.4% and 9.6%, respectively.

But, while projected ratios are staying relatively stable, they are becoming increasingly important to the US industry as annual beef production is forecast to increase about 4% in 2016 and 2017 to 24.8 and 25.9 billion pounds, respectively.

That means the LMIC is expecting exports to increase about 70 million pounds from 2015 to 2016 and increase another 150 million from 2016 to 2017.  If exports fall short, the additional product will have to be absorbed by the domestic market.


2016 SO FAR


For the first quarter of 2016, exports as a percent of production are running even with year-ago levels, which is good news for producers as US beef production is up.

US beef exports are rising seasonally, and volumes are holding closely to last year and the 2010-2014 average.

There is a strong seasonal tendency for US beef exports to peak in July.  Last year, they peaked in June and thus diverged sharply from the previous five-year average until late fall and into the winter, even though the angle of descent into the September bottom was similar to the average.

This shows the US beef industry cannot afford major trade disruptions.




But if the beef industry is reliant on exports, the US pork industry is even more so.  In fact, the LMIC shows they are falling behind, pushing meat onto the US domestic market.

For the 2010-2014 average, annual pork exports made up 21.5% of annual production.  In 2015, this number moved to 20.2% and 2016, and for 2017 it is forecast at 20.6% and 20.9% respectively.

While the ratio of exports as a percent of production decreased in 2015 compared with the five-year average, pork exports actually increased 1.7% year-over-year compared with 2014.  This was not enough of an increase to absorb the 7% production jump from 2014 to 2015.

First-quarter 2016 exports were 19.6% of the quarter’s production total, compared with 18.9% for the same time frame in 2015.




Cash cattle markets Thursday traded $5 to $6 per cwt higher than last week at $132 to $134 on a live basis.  Dressed-basis prices were up $7 to $9 at around $207.

The USDA’s choice cutout Thursday was higher at $214.46 per cwt, up $0.75, while select was up $2.25 at $205.24.  The choice/select spread narrowed to $9.22 from $10.72 with 80 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was $145.60 per cwt, up $1.23.  This compares with the May settlement Thursday of $147.82, down $1.17.