The USDA’s Foreign Agricultural Service in Beijing, China, said Friday in a report that it maintained is 2025 forecast for a decline in China’s pork and beef production.
As a result of the domestic production decline and growing market demand, the FAS forecast China’s beef imports to grow in 2025. But the FAS revised downward its 2025 pork import forecast to levels similar to 2024 because of depressed demand.
ASSUMES STABLE POLICY
The FAS report forecast reflected animal disease policies/restrictions and trade policies in place as of March 3 and assumes their continuation. The FAS acknowledged, but did not include in its forecast the potential effects of retaliatory tariffs announced March 4 by the Chinese Government, which come into effect on March 10, as well as the impending registration expirations of hundreds of US meat establishments as they were not in effect at the time of the FAS report publication.
Market access for US beef and pork remained constrained as the Chinese government is not implementing relevant annexes for meat trade specified in the Economic and Trade Agreement (i.e., Phase One Agreement).
CATTLE PRODUCTION TO DECLINE
The Beijing FAS office maintained its forecast of declining calf production in 2025 based on lower beginning cow stocks. Total Jan. 1 cattle supplies were estimated at 100.470 million head, compared with the official USDA estimate of 104.000 million and last year’s estimate of 105.090 million.
Beef prices continued to decline throughout 2024 and at last check were near 2018 levels. While feed costs, a major cost for cattle production, decreased, beef prices fell even further.
Sources indicated that the profitability of China’s beef cattle industry has been declining since 2022. Producers’ losses have persisted since 2023 and worsened in 2024.
Sources indicated about 70% of cattle farmers across the country were operating at a loss.
More than 98% of beef cattle farms are small-scale operations with fewer than 50 head. These small farms are especially sensitive to falling prices, and many farmers rely on loans to sustain their operations.
As a result, they began slaughtering their cattle and cows. Since first-quarter 2024, the beef cattle inventory has decreased.
According to the National Bureau of Statistics, by the end of 2024, the total beef cattle population declined by 4.4% compared with the previous year. Once the inventory declines, it will be difficult for these small farms to rebuild their herds.
With a large number of breeding cows being sold for slaughter, and calf production per cow not significantly improved, the reduction in the cow population likely will lead to a decrease in cattle production in 2025.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $197.87 per cwt to $199.62, compared with last week’s range of $197.00 to $203.12 per cwt. FOB dressed steers, and heifers went for $310.41 per cwt to $314.20, compared with $310.62 to $313.95.
The USDA choice cutout Wednesday was down $0.10 per cwt at $321.10 while select was up $0.67 at $307.53. The choice/select spread narrowed to $13.57 from $14.34 with 122 loads of fabricated product and 31 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $381.25 per cwt, and 50% beef was $112.70.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.32 a bushel over the May corn contract, which settled at $4.60 3/4, down $0.09 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $278.71 per cwt, up $2.17. This compares with Wednesday’s Mar contract settlement of $280.25, up $2.75.