March 17, 2004

US Beef Exports To Mexico Set To Decline On High Price

US beef exports to Mexico is expected to fall sharply as a result of strong competition from Canada and high US prices, the U.S. Agriculture Department said on Tuesday.

By the third quarter of 2004, U.S. beef exports to Mexico will average about two-thirds of the 156 million pounds reached in the fourth quarter of 2002, the USDA said in its monthly Livestock, Dairy and Poultry Outlook report.

U.S. beef remains locked out of most other major markets such as Japan and South Korea, which halted shipments after the first U.S. case of mad cow disease was found in December.

Earlier this month, Mexico said it would reopen its borders to deboned beef from U.S. cattle younger than 30 months.

As of Monday, 16 U.S. beef plants have received approval to export to Mexico, according to the USDA. This includes plants owned by Tyson Foods, Cargill's Excel Corp. and Swift & Co.

"Exports are expected to be limited because beef from U.S. cattle over 30 months of age remains banned, while Canada will be a strong competitor in the market for beef products from animals under 30 months of age," the USDA said.

"With fed cattle prices in the United States expected to average $74-$76 per hundredweight in 2004, beef prices are likely to remain relatively high in terms of pesos and limit Mexico's ability to import U.S. beef, unless the peso were to strengthen significantly," it added.

Mexico, which counts on its northern neighbor for about 90 percent of its beef imports, bought $877 million worth last year.