Japan Eyes Changes On U.S. Frozen Beef Imports

Japan hopes to avoid conflict with the United States by modifications to its safeguard mechanism on frozen U.S. beef imports. The proposal would shorten review periods and allow importers to lower voluntarily import volumes to keep tariffs from going into effect automatically.

The proposal comes as the U.S. is making continuous noise about lowering trade deficits and saving jobs. U.S. pressure is on a number of countries with discussions on the North American Treaty Agreement with Mexico and Canada in Washington this week.

 

U.S MAY NOT BE RECEPTIVE

 

Reuters reported the proposal from Tokyo with two government officials as sources. Japan will bring up the proposal October 16 in Washington at the second round of the U.S.-Japan economic dialogue. Sources say it is uncertain if the U.S. will be receptive to the move. Japan and the U.S. are important trading partners and the Japanese are nervous about anything that might alter that relationship.

Japan says the tariff hike, set to be in place until next March, is a “safeguard” mechanism to protect domestic farmers, but it has prompted some concern in Washington.

Instead of reviewing import data on a quarterly basis, Japan will suggest shortening this period to every 10 days, the sources said. This will make it easier for companies that import beef to adjust volumes and avoid triggering tariffs, the sources said.

 

DEMAND COULD SURGE NEXT APRIL

 

One source told Reuters the proposal may not work because frozen U.S. beef imports could surge next year in April after the current tariff increase expires.

“Once the safeguard is triggered, there is a concern that it will repeatedly be triggered in the future,” the source said.

The first round of the U.S.-Japan economic dialogue was in Tokyo in April. Although it ended largely without incident, there remains concern among Japanese officials. They fear the U.S. side could push strongly for trade concessions during the second dialogue meeting.

Japan had a $69-billion trade surplus with the United States last year, according to the U.S. Treasury Department. The U.S. has raised concerns over what it called the “persistence” of the imbalance.

Japanese officials contend that Tokyo accounts for a much smaller slice of the U.S. deficit than in the past, while China’s imbalance is much bigger.

 

WASDE REPORT

 

The forecast for 2017 total red meat and poultry production is raised from last month as higher broiler and turkey production more than offset fractionally lower beef and pork production, according to the World Agricultural Supply and Demand Estimates (WASDE).

Total red meat and poultry production for 2017 was hiked in the report. Higher broiler and turkey production more than offset the fractionally-lower beef and pork production, the report said.

 

LOWER WEIGHTS ON BEEF

 

Beef production is reduced from the September report largely due to lower-expected fourth-quarter carcass weights. The pork production forecast is lowered on smaller-than-expected third-quarter commercial hog slaughter offset higher expected second-half carcass weights.

For 2018, the total red meat and poultry forecast is raised from the previous month as higher expected beef and pork production more than offset declines in turkey production.

 

CATTLE, BEEF RECAP

 

Slaughter-ready cattle in the southern U.S. Plains brought $111 per cwt in Thursday morning trade. Sources said the price was up about $2 from last week, but was about $1 less than some had anticipated. Cash bids for remaining cattle were at $108 to $110 per cwt against sellers standing pat for $113.

Boxed beef cutout values were firm to higher on moderate to good demand and light to moderate offerings. Choice prices were $197.44, up $1.12, while select was up 69 cents at $189.45. The choice/select spread was $7.99 and there were 121 loads of fabricated product sold into the market.  The CME Feeder Cattle Index for the seven days ending Wednesday was $155.14, down 8 cents. The October feeder cattle contract at the Chicago Mercantile Exchange closed at 153.625.