Trade Necessary To US Meat Producers

The increased role of trade in the last decade for beef, pork and poultry highlights its importance to all meat markets, said Oklahoma State University Extension Economist Derrell Peel, in a release.

While each industry concentrates on its production, it is apparent that all meat sectors increasingly are affected by trade.  Changes, or disruptions in trade of individual meats often affects other meats in international and domestic markets.

 

EXPORTS RISE OVER TIME

 

Meat imports have been relatively constant at about 4.7% of domestic meat production since 1960, he said.  1992 was the first year that meat exports exceeded meat imports.

Meat exports have averaged 12.3% of production since 1992 compared with 1.3% from 1960 to 1991.  Exports exceeded 5% of production for the first time in 1992 and grew rapidly for beef, pork and poultry in the 1990s with total exports exceeding 10% of production by 1996.

Total meat exports have exceeded double-digit percentages of production since 1996 except for 2004, when they dropped to 9.5% of production largely because of reduced beef exports as a result of BSE.

Net exports have exceeded double-digit levels since 2008, averaging 12.0% from 2008-2016 with lower meat imports (averaging 4.1% of production) and continued strong exports (averaging 16.1% of production).  In 2016, net meat exports were 11.0% of domestic production, up from 2015 but down from the peak of 13.7% in 2011 and 2012.

 

EXPECTATIONS UP

 

Net meat exports were expected to continue rising this year, approaching 12% of production.  However, many disease incidents or political changes could affect this forecast.

The top five countries for 2016 meat exports were:  Mexico (23.6%); Japan (12.9%); Canada (8.3%); South Korea (6.3%) and Hong Kong (5.4%).  These accounted for 56.5% of meat exports with the NAFTA market accounting for 31.9% and the three Asian markets accounting for 24.6% of total meat exports.  These five countries accounted for 82.6% of beef exports; 74.7% of pork exports and 32.2% of poultry exports.

All five countries were important markets for beef, pork and poultry in 2016, with the exception of no poultry exports to Japan and less than 5% of total poultry exports going to South Korea.

Other important markets tend to be dominated by individual meats.  For example, 85.7% of Caribbean meat exports are poultry (4.7% of total meat exports); China, 99% is pork (3.5% of the total), and Taiwan, 87.7% is beef (1.1% of exports).

Meat imports are heavily dominated by beef, which accounted for 71.1% of the total in 2016.  Pork accounted for 25.8%.

Beef trade is much more complex than other meats with many diverse product markets and the massive effect of the ground beef market, Peel said.  In 2016, it was estimated that 45% of US domestic beef consumption was ground beef with about 48% being provided by imports.

 

CASH CATTLE QUIET

 

Cash cattle markets were quiet with asking prices at $130 to $135 per cwt on a live basis and $212 to $215 dressed.

Average fed cattle exchange auction prices Wednesday were $5.00 per cwt higher at $133.31, versus $128.31 a week earlier.

Last week, cattle traded in the Plains at $125 to $131.50 per cwt, mostly $127 to $130, up $3 to $5 from the previous week.  Dressed-basis trading was mostly at $210, up $8 to $10.

The USDA’s choice cutout Wednesday was down $1.93 per cwt at $223.00, while select was up $0.39 at $215.80.  The choice/select spread narrowed to $7.20 from $9.52 with 111 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $130.02 per cwt, up $0.07.  This compares with Wednesday’s Mar settlement of $134.00, up $2.00.