Mexico is an anomaly among US beef trade markets with exports increasing, despite decreasing exports to most other markets and decreasing imports from Mexico, despite increasing imports from other major import sources.
Derrell Peel, Oklahoma State University Extension livestock marketing specialist, said in a letter called Cow-Calf Corner that numerous factors contribute to current beef trade with Mexico, including Mexican macroeconomic and domestic beef market conditions, along with a stronger Peso.
THERE IS HISTORY
The US and Mexican cattle industries have an evolving trade history, Peel said. Cattle frequently served as currency between Mexico and the US from the US Civil War through the Mexican Revolution and World War I.
In the last 25 years, an average of 1.15 million head of cattle were imported from Mexico annually, representing an average of 3.3% of the US calf crop, he said.
The next phase of US/Mexican beef industry trade was the growth of beef exports to Mexico that began in the 1990s and accelerated in the later part of the decade, Peel said. By the late 1980s, Mexico was the third largest export market, at 6% of the total, because there simply weren’t many other export markets. Japan accounted for 70% of total exports then.
Growing rapidly after 1996, Mexico rose to become the number two export destination and accounted for an average of 23.3% of exports from 2000-2003, he said.
After the 2003 BSE case, Mexico was the only beef export market that did not close or greatly reduce, Peel said. Mexico accounted for 72.4% of total beef exports in 2004 and averaged 59.4% of exports from 2004-2007. Mexico was the number one beef export market from 2004-2010 before other markets recovered.
Mexico was the number two or three export market each year from 2011-2020 and averaged 15.0% of beef exports over the period, he said. Recently Mexico dropped to the number four market with an average share of 9.2% of total exports from 2021-2023.
The final phase of the increasingly integrated US and Mexican beef markets is Mexico’s emergence as a major global beef exporter, Peel said. US imports of beef from Mexico accelerated rapidly after 2009, with the country jumping to the number four place as a beef import source in 2010.
Mexican beef imports continued to grow with the country moving into the number three spot as a US beef import source by 2017 and number two in 2021, Peel said.
That growth is largely because the Mexican beef industry switched from carcass-based beef markets to boxed beef technology in the 2000s, bringing much more value as products could be targeted to specific markets, he said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $183.87 per cwt to $184.18, compared with last week’s range of $181.00 to $183.70 per cwt. FOB dressed steers, and heifers went for $286.46 per cwt to $286.69, compared with $284.25 to $290.12.
The USDA choice cutout Monday was up $1.62 per cwt at $301.81 while select was down $0.80 at $287.79. The choice/select spread widened to $14.02 from $11.60 with 79 loads of fabricated product and 18 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $367.88 per cwt, and 50% beef was $84.80.
The USDA said basis bids for corn from feeders in the Southern Plains were down $0.02 at $1.33 to $1.45 a bushel over the Dec corn contract, which settled at $4.13 1/2 a bushel, up $0.11 3/4.
The CME Feeder Cattle Index for the seven days ended Friday was $243.50 per cwt, up $0.24. This compares with Monday’s Sep contract settlement of $245.10, down $0.45.