U.S., Peru Slice Beef Export Barriers

The U.S. and Peru have agreed to remove barriers that will open one of the fastest-growing markets in Latin American to all American beef and beef products. The restrictions have been in effect since 2003.

In 2015, the United States exported $25.4 million in beef and beef products to Peru. Since the U.S.-Peru Trade Promotion Agreement (PTPA) took effect in 2009, U.S. beef and beef products have grown substantially. But they have been hampered by burdensome certification requirements installed by Peru in 2003. The agreement reached Monday during USDA Secretary Tom Vilsack’s trade and investment mission to Peru will remove those barriers — called the export verification program. That will assure American ranchers of expanded market access.

Vilsack said the United States and Peru have enjoyed one of the strongest bilateral trade relationships in the Western Hemisphere since 2009. “Today it became much stronger,” said Vilsack . “Since 2003, USDA and USTR have worked diligently to reopen and expand markets once closed to U.S. beef. This is another win in a long line of successes that led to a near-record U.S. beef and beef product exports in 2015. ”

U.S. Trade Representative Michael Froman said that not many years ago, there was little American beef going to Peru, “but through the U.S.-Peru Trade Promotion Agreement, and agreements like this, we are seeing increased demand for high-quality American beef.”

Bilateral trade of agricultural, fish and forestry products between the United States and Peru topped $3 billion in 2015 and has grown more than 110% since 2009.

The latest agreement reflects the United States’ negligible risk classification for bovine spongiform encephalopathy (BSE) by the World Organization for Animal Health (OIE). Through an exchange of letters, the United States and Peru have agreed to changes in certification statements. The changes will allow beef and beef products from all federally-inspected U.S. establishments to be eligible for export to Peru. Previously, the only beef exports allowed were from establishments that participated in the USDA Agricultural Marketing Service (AMS) Export Verification (EV) programs under the previous certification requirements.

 Choice Report Card Too Hefty?

Choice beef is getting a lot of good grades and some analysts think the grading system may need some updating and tinkering to ensure that production stays in line with constantly-increasing customer expectations.

Industry leaders are concerned and want to keep a close eye on developments. For example, a strong rise in last week’s choice been premium could be a short-term blip. Or it could signal the beginning of an earlier-than-normal spring season rise, analysts at the Daily Livestock Report said. The report noted that the premium for choice over select beef widened markedly by $3.82 per cwt on a year-over-year basis in the weekly USDA-AMS data collected from packers.

The report is published by Steve Meyer & Len Steiner Inc. The analysts emphasized that he percentage of cattle grading choice has increased consistently in recent years. The report said this is a result of improved genetic profile of the U.S. herd, technological changes in how carcasses are graded, standardization of measurement and changes in production and feeding practices.

The analysts said that more than 70% of carcasses achieved the choice stamp for the first time in the weekly grading data in February 2015. That level is now common. So far this year, more carcasses have graded choice than in 2015. Since the majority of carcasses now grade choice, wholesale market differentiation could increase between products graded in the lower one-third of the choice grade versus the upper two-thirds, the analysts said.

“The U.S. grading system may need some updating so price signals are effectively relayed up and down the marketing chain, helping ensure beef produced remains in-line with ever rising customer expectations,” they concluded.

Cash Cattle 

The USDA said negotiated cash trade was mostly at a standstill in all feeding regions on Monday. The latest established market in any feeding region was last week with live sales at $138 in the Southern and Northern Plains. Dressed sales sold at $220 in Nebraska and the Western Cornbelt last week.  Live sales in the Western Cornbelt sold from $138 to $139.The USDA said boxed beef cutout values were sharply higher on moderate to good demand and moderate offerings on Monday. Select and choice rib cuts were steady while chuck, round and loin cuts were firm to higher. Beef trimmings generally steady on moderate to good demand and light offerings.

Choice prices were $227.47, up $3.42 per cwt., and select was $2.17, The choice/select spread widened to $9.98 and there were 113 loads sold into the spot market. The CME Feeder Cattle Index for the seven days ending Friday was $160.63 per cwt. This compares to Mar’s Monday settlement of $162.050, down 0.350