Mexico, A Rising Beef Export Star

Annual Mexican beef and veal exports have grown rapidly since 2008’s 23,000 tonnes, with totals rising to more than 300,000 in 2015, making Mexico the 10th largest exporter in the world.

Mexico’s beef exports exceeded Argentina for the first time in 2015, according to USDA Foreign Agricultural Service records, with the US its largest customer, rising to 90% in 2015 from around 60% a few years ago.

 

FAST COMPANY GROWTH

 

Much of Mexico’s beef export growth is because of SuKarne, the largest cattle feeding and beef processing company in Mexico, said Derrell Peel, Oklahoma State University extension livestock marketing specialist, in a market commentary.

Meat+Poultry magazine lists SuKarne as the 19th largest meat company in North America with projected 2016 sales of $2.5 billion, Peel said.  SuKarne processes more than 1.2 million head of cattle annually and accounts for roughly 74% of total Mexican beef exports.

Meat+Poultry Friday reported SuKarne’s opening of AgroPark SuKarne Lucero, the second-largest beef processing plant in Mexico on March 31.  The complex has a one-time feedlot capacity of 250,000 head, a plant that can process more than 800,000 heae a year, a laboratory for quality and safety certification as well as warehouse, storage and distribution facilities.

Most product from the new facility was expected to be exported.  The plant will represent a substantial increase in demand for cattle across much of Mexico and will also require large amounts of feed grain, much of which are likely to come from the US.

 

CHANGES

 

The Mexican beef industry has changed dramatically in the past 10 to 15 years, Peel said.  There has been a significant and rapid expansion in federally inspected slaughter and widespread adoption of boxed beef technology, which expanded domestic and international market opportunities.

The SuKarne company is well positioned and recognizes the opportunities in Mexican domestic and export markets, Peel said.  However, this growth occurred simultaneously with, and depended on, several concurrent changes in Mexican food markets and infrastructure.

Mexico has expanded and improved highways over and around the mountains, greatly increasing the ability of beef companies to source, assemble and ship cattle over much longer distances to support large feedlots.

Meat distribution systems similarly benefited, and the rapid growth and expansion of supermarkets and increased use of cold storage and refrigerated shipping all facilitated the growth of large scale meat processing and distribution.

 

US IMPLICATIONS

 

Growing domestic fed beef production and significantly enhanced product differentiation likely mean the potential for increased US beef exports to Mexico is limited.

Finally, Mexico has been the source of an average of about one million head of feeder cattle a year, but increased demand for expanded feedlot capacity there is likely to push domestic cattle prices closer to the US market, likely reducing feeder cattle exports.

 

CASH CATTLE TRADE QUIET

 

No cash cattle trade was reported Monday, with bids and offers not clearly defined.

Cash cattle last week traded at $132 to $133 per cwt on a live basis and $214 to $216 on a dressed basis.  Both were down ab out $3.

The USDA’s choice cutout price Monday was down $1.60 per cwt at $217.51, and select was off $0.70 at $206.23.  The choice/select spread narrowed to $11.28 from $12.18 as 105 loads of fabricated product were sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $158.27 per cwt, down $0.26.  This compares with the Apr CME settlement Monday of $156.67, up $0.47.