China’s beef and broiler meat imports should rise 11% and 7% in 2018 but despite being a key global trader, the United States won’t immediately realize full potential from the growth.
The forecast is part of the USDA’s Foreign Agriculture Service’s twice-annual report “Livestock and Poultry: World Markets and Trade.”
Demand is robust in China and stagnant or contributing to the growth. But additional imports growth is hindered by restrictions which limit supplies from the U.S.
The U.S. has been suspended from exporting broiler meat to China because of the highly pathogenic avian influenza (HPAI) restrictions. That should change soon as The World Organization for Animal Health declared the United States HPAI-free as of Aug. 11, 2017.
Beef exports from the U.S. to China are likely to be limited in the short term because of market requirements which curtail maximum trade opportunities.
China is the world’s second and seventh largest beef and broiler meat importer, respectively, accounting for 13% and 5% of forecast trade.
Pork imports by China also are forecast to decline for the second consecutive year in 2018 as domestic production gains reduce demand of imported pork.
GLOBAL BEEF PRODUCTION UP
Global beef and veal production is predicted to grow nearly 2% in 2018 to 62.6 million tons with the United States and Brazil accounting for about half of the growth. Brazil will benefit from expanding exports but potentially faces headwinds from domestic industry issues.
Argentina’s production will be helped by favorable policy developments and herd expansion. Australia’s beef production is also rebounding as it recovers from drought-induced herd liquidation with herd rebuilding.
Global exports in 2018 are projected nearly 3% higher to 10.1 million tons, driven by shipments from Brazil, Australia, Argentina, and the United States. The FAS said demand in East Asia will remain robust. China, in particular, will continue to drive trade, as domestic production can’t meet growing consumption.
U.S. beef production should rise nearly 3% in 2018 to a record 12.4 million tons, as the United States enters the fourth year of its herd expansion. Sustained elevated supplies and lower U.S. beef prices will boost exports to Mexico, Canada, and major markets in East Asia.
The United States will face renewed competition in Asian markets from Australia as its herd expands. In Japan, the United States will also have to contend with Australia’s widening tariff advantage. A relatively weaker U.S. dollar in 2018 could further buoy U.S. beef exports.
CHINA PRODUCES MORE PORK
Global pork production is forecast up nearly 2% in 2018 to 113.1 million tons, primarily on expansion in China and to a lesser extent the United States. China’s pork production will rise for the second consecutive year as producers respond to positive returns.
Robust consumer demand for pork will also aid output in Russia, the Philippines, and Mexico. Among major producers, only the European Union will reduce output due to a stagnant domestic market and export sales.
Global exports are forecast nearly 3% higher in 2018, driven by strong demand from Mexico, the Philippines and South America. China will remain the top pork importer. In the U.S., production should grow 4% in 2018, continuing strong growth from 2017.
Mexico will remain an important market for the United States, aided by relatively high domestic prices. Shipments will also remain resilient to Asia, especially to Japan and the Philippines.
CATTLE, BEEF REPORT
Boxed beef cutout values were weak to lower on light to moderate demand and offerings. Choice was at $197.66, down $1.15 while select was at $189.85, down 72 cents. The choice/select spread was $7.81. There were 119 loads of fabricated product sent to market. Cash trade was at a standstill early Tuesday in all regions. Live purchases last week ranged from $110.00 to $111.50. Dressed purchases were at $175.00. The CME Feeder Cattle Index for the seven days ending October 16 was $155.06, down 60 cents from Friday. October’s feeder cattle contract at the CME closed at $152.200, down $1.80.