Overall 2016 beef export possibilities are improving as USDA Foreign Agricultural Service reports predict decreased production in several countries.
However, the picture isn’t all rosy. Red meat production in Brazil was expected to increase while domestic consumption was expected to decline.
FIRST, THE GOOD NEWS
“US beef is poised to reclaim lost market share in 2016 as Australian supplies tighten and price offers climb, despite a widening tariff advantage for Australian beef,” the FAS said in its latest Agricultural Attache report.
Japanese beef production was expected to fall again this year as the domestic feeder calf industry continues to contract. Production was estimated at 475,000 tonnes Carcass Weight Equivalent, down from the official USDA estimate of 480,000 tonnes CWE.
The 2015 beef production estimate now rests at 481,000 tonnes CWE, versus the USDA estimate of 490,000 tonnes.
Meanwhile, Japanese pork production was expected to recover from its Porcine Epidemic Diarrhea virus outbreak, tamping prospects for imported chilled pork. Ample global supplies of frozen pork were expected to help Japanese processors rebuild stocks and fuel continued competition between North American, South American and EU suppliers to the Japanese market.
The Australian cattle herd was expected to decline again this year to 25.6 million head, the FAS Attache said. Slaughter, and beef production, could be cut even more as improved grass conditions likely will result in heifer retention.
Improved pasture forecasts, especially for Queensland and New South Wales, were expected to focus herd rebuilding into these areas.
Beef and veal exports were expected to decline to 1.6 million tonnes despite strong international demand. Live cattle exports could fall to 1.1 million head, and beef exports could drop sharply to 1.63 million tonnes CWE from the previous 2015 estimate of 1.86 million.
Increased competition for the lucrative Japanese market was expected because of the limited supply. However, Australia’s competitive edge has improved over last year by a lower Australian dollar versus the US dollar.
NOW, SOME BAD NEWS
The USDA-FAS agricultural attache in Brazil forecast increases in 2016 beef production to 9.645 million tonnes CWE, compared with the latest USDA estimate of 9.600 million and last year’s 9.425 million.
Beef exports were expected to “rebound” at a rate of nearly 10% to nearly 1.9 million tonnes CWE, mostly on the back of a devalued Brazilian currency and higher demand from Asia. The Brazilian Real devalued by 38% in the 12 months ended in February, making Brazilian product more competitive in the world market.
CASH CATTLE MARKETS TRADE LIGHTLY
Cash cattle markets Wednesday traded lightly with generally insufficient bids from packer buyers and feedlots pricing cattle at $140 per cwt on a live basis and $220 dressed. Trade was reported at $214 to $216 in Nebraska’s dressed market, and there were rumors of a single trade in Texas at $134 live.
Cash trading last week was $3 to $4 lower at mostly $136 per cwt on a live basis and off $2 to to $4 on a dressed basis at mostly $218.
The USDA’s choice cutout price Wednesday was down $3.19 per cwt at $221.87, and select was off $4.16 at $212.68. The choice/select spread widened to $9.19 from $8.22, as 139 loads of fabricated product were sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was $158.29 per cwt, up $0.21. This compares with the Apr CME settlement of $152.57, down $3.50.