US Beef Production Advantages Push May Exports

The US’ competitive advantage in beef production in comparison to other beef breeding countries has enabled it to increase its global beef trade, said the USDA’s Economic Research Service in its monthly Livestock, Dairy, and Poultry Outlook.

The 2016 forecast for US beef exports, at 2.469 billion pounds, is 203 million, or 8.96%, higher than 2015’s 2.266 billion, and total exports were expected to increase even further in 2017 to 2.580 billion, according to the Outlook and World Agricultural Supply and Demand Estimates report.

 

MAY BEEF EXPORTS CLIMB

 

After a slow start for the first four months this year, US beef and veal exports rose 26,507 million, or 13.8%, in May to 219.055 million pounds from 192.548 million a year ago.

The ERS credited the total increase to higher shipments to Japan (up 28.4% at 19,121 tonnes), Mexico (up 40.1% at 11,458 tonnes) and to South Korea (up 59.8% at 14,335 tonnes).

US beef and veal exports to South Korea were exceptionally high in May as the cattle inventory there remains constrained, resulting in lower beef production and greater import demand.

Volume-wise, Japan remains the top market for US beef and veal, the Outlook report said.

“May’s increase in beef exports is indicative of stronger demand for US beef products by foreign buyers,” the Outlook report said.  “Also, it is noteworthy that during the month of May the US dollar index continued to weaken relative to other major currencies, supporting higher exports from US beef suppliers.”

 

BEEF IMPORTS

 

Conversely, May’s weaker US dollar index resulted in a continued weakening of US imports, with a 9.88% decline year over year to 275.328 million pounds versus 305.506 million a year earlier.

Cumulative imports through May totaled 1.341 million pounds, down 12.2% from 1.527 million a year earlier.  Imports were lower from Australia (down 35% to 386.785 million pounds on a carcass weight basis), Brazil (down 23% to 48.149 million) and Uruguay (down 52% to 45.602 million).  Imports increased from New Zealand (up 8% to 332.181 million), Canada (up 16% to 285.112 million) and Mexico (up 21% to 184.370 million).

Processing-type beef imports from Australia were expected to decline through the rest of the year as favorable US weather continues to support herd rebuilding, the Outlook report said.  Also, Australian cattle slaughter and beef production remain well below year-earlier levels, limiting the volume of beef available for export.

The forecast for US beef imports in 2016 was raised to about 2.9 billion pounds on higher-than-expected imports from New Zealand in the second quarter, the Outlook report said.  However, imports from New Zealand should begin to decrease in the second half as slaughter rates there decline.

 

CASH CATTLE TRADE QUIET

 

Cash cattle markets Tuesday were traded lightly with scattered Nebraska sales at $186 to $187 per cwt on a dressed basis, steady to $1 lower than last week.  Packer bids elsewhere were posted at $115 on a live basis, while asking prices were undefined.

Cash trade was reported Friday at $117 per cwt on a live basis with some in Nebraska at $117.50, down $3.  On a dressed basis, prices ranged from $187 to $188, down $4.

The USDA’s choice cutout Tuesday was $0.29 per cwt lower at $202.28, while select was up $1.25 at $192.36.  The choice/select spread narrowed to $9.92 from $11.46 with 129 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $141.35 per cwt, down $0.24.  This compares with the Aug settlement Tuesday of $139.90, down $1.27.