May 22, 2007

US beef import projections up 5 percent for 2007

US beef imports during the first quarter of 2007 have  reached 770 million pounds, down nearly 9 percent from the first quarter of 2006 while domestic cow slaughter remained high from year-ago levels in early 2007. Domestic lean beef prices have been attractive in comparison with import prices.

Cow slaughter in the US were above levels from the period last year as pasture and forage conditions is seen to good start this year in most regions and is expected to relieve the pressure to cull animals. Beef imports for the remaining three quarters of 2007 are seen to be also above year-earlier levels.

US beef imports this year are cut down to 3.24 billion pounds but still up by 5 percent from the 2006 total. The initial forecast for 2008 imports is 3.30 billion pounds, 2 percent higher than the 2007 forecast. US domestic cow slaughter is expected to fall in 2008 because attractive cattle prices should encourage cow preservation alongside with good weather. The gradual movement of US beef back into Asian markets is expected to give Australia and New Zealand a good competition but limited world supplies of lean processing beef make larger year-to-year increases appear more difficult.

First-quarter imports from Australia have decreased by 14 percent from the same period in 2006 and are expected to remain below typical historic levels for some time. Australia's beef imports to the US are perceived to continue because of the extensive drought.

The Australian beef industry has shifted to short-fed production (animals on concentrated grain rations for 90-120 days) to cater Japan and South Korea which, by far, are the strong markets for Australian beef this year. However, the US beef imports' resumption in those market could affect Australian feeders and seek other markets.

Uruguay has continued its beef imports to the US although it does not expect to post significant gains from competition of Brazil and Argentina. Uruguayan beef is expected to flood the US market as Russia, EU and Chile will seize Brazilian and Argentine beef products.

On the other hand, Argentine beef exports will continue to suffer as the country struggles with domestic policies that both discourage production and limit exports.