TPP Will Aid U.S. Beef Exports to Japan

The Trans-Pacific Partnership agreement (TPP) will no doubt enhance the competitiveness of U.S. mean on the Japanese market, according to the president and chief executive of the U.S. Meat Export Federation.

Phil Seng said it is too early to make any volume increase forecasts, the outlook is strongly positive. “It will bring down the tariffs on beef and give us a level playing field,” Seng said in a recent interview with DTN at the FOODEX international trade show.

Under the Australia-Japan free trade agreement, the Japanese tariffs on beef don’t go as low as those under the TPP agreement, Seng emphasized. But he said that after 15 years of the TPP the tariffs will go down more for beef from signatory countries than under the agreement with Australia.

The Australia-Japan FTA came into effect in January last year. Under its provisions, Japanese tariffs on beef, normally at 38.5%, will drop to 23.5% for chilled beef within 15 years. The tariff for frozen beef will fall to 19.5% within 18 years. Conversely, under the TPP, the tariffs will fall overall to 9% over 15 years.

Currency Rate Edge

Seng said that the yen has recently appreciated to the U.S. dollar but weakened to the Australian dollar. That also gives U.S. exporters a currency rate edge over their Aussie counterparts. The drought in Australia also has reduced the country’s cattle herd size. “So we think our (beef) exports (to Japan) will increase,” Seng said.

U.S. beef exports to Japan hit $1.58 billion in 2014, but dropped roughly 18% in 2015. The U.S. spent more than a decade rebuilding the beef market to Japan after being cut off in 2003 following a case of bovine spongiform encephalopathy.

The U.S. is looking for a rebound in pork exports to Japan after seeing both volume and value decline in 2015. U.S. pork exports to Japan fell to $1.59 billion, the lowest since 2009.

Seng acknowledged there are projections that Japan’s population is declining, which would reduce demand for overall food exports. But he noted that tourists in Japan last year numbered 20 million. “We see that going up to 30 million” a year, Seng said.

Although the total Japanese population is declining, the tourist population is increasing, which creates a huge potential in the hotel and restaurant business, Seng said. “You take that, with the tariffs declining, and it’s a terrific opportunity,” he said.

More Corn Plantings Likely

U.S. farmers will expand their plantings of corn by nearly 3 percent in 2016 while scaling back slightly on soybeans. That’s according to a survey of growers released by Allendale Inc., the Illinois-based research and brokerage firm.

Allendale’s survey of farmers in 25 U.S. states said plantings of corn would increase to 90.431 million acres from 87.999 million in 2015, with soybean acreage dipping to 82.575 million from 82.650 million.

Cash Cattle Trade

Not much is occupying the thoughts of the cash cattle trade but this afternoon’s Cattle on Feed Report. Most trade likely will be delayed until after the release of the 3 p.m. EDT report , which may delay active cash cattle trade until after the report release. Futures trade is expected to remain mixed to moderately lower as pressure in beef values Thursday is creating concerns of a market pullback

Cash cattle activity is still at a standstill Thursday afternoon, although scattered bids are starting to develop. Asking prices continue to remain at $143 in South and $225 across the North, indicating that trade will likely be seen sometime Friday, potentially delayed until after the Cattle on Feed report.

On Thursday, cash cattle appeared to be $139 to $140, with a few dressed sales from $222 to $225. Choice boxed beef prices were up 72 cents to $234.64 today, but select boxes were down 71 cents to $222.97. WTD slaughter was estimated at 442,000 head, up 12,000 head from last week, and 11,000 head larger than the same week in 2015. The CME Feeder Cattle Index for the seven days ending Wednesday was up $1.11 cents to $161.52. That compares to Mar’s settlement of $163.72, down 0.72.

Weekly export sales totaled 14,401 MT during the week ending last Thursday, an increase of 82% from the week before, This was the second largest weekly total of the year. Total year to date commitments are smaller than the same week a year ago (98.6%) for the first time this marketing year.