June 15, 2011

US beef exports exceed pre-BSE levels

A weak US currency has aided the increment of US beef exports this year that rose 31% on year, to 388,492 tonnes cwt for January to April, and surpassing pre-BSE export levels from 2003, according to the USDA.

Contributing to this rise has been a significant increase in shipments to Korea, up 157% on 2010 levels, to 75,242 tonnes cwt. Together with a weaker US dollar, the impact of the foot and mouth disease outbreak in Korea on domestic meat supplies, particularly pork, and a lift in fed US cattle marketing, has assisted the US beef trade to Korea.

The weaker US currency has also assisted higher US beef shipments to Japan (up 58% on year, to 58,381 tonnes cwt) and Canada (up 18%, to 59,541 tonnes cwt). For the first time on record, Canada became the number one export destination for US beef in April, receiving 17,963 tonnes swt. A decline in Canada's cattle inventory, reduced beef imports from Australia, New Zealand and Uruguay, along with a stronger Canadian dollar against the US dollar has assisted demand for US beef.

Despite US beef production expected to remain relatively steady in 2011 and US beef imports to decline (with total US beef supplies to drop), the strength of market conditions for US beef abroad has been the premise for the USDA to raise 2011 US beef export forecasts, to 2.593 billion lbs (up 13% on year ago levels).

Assisting export conditions, US cattle placements into feedlots so far this year has been higher than year ago levels, which will assist an increase over coming months in eligible US beef for the Japan and Korean market. Current market access conditions in Japan require US beef to be sourced from cattle not exceeding an age of 21 months and in Korea this requirement is for cattle not to exceed an age of 30 months.

Looking further, the USDA predicts US beef exports in 2012 to drop 3% on 2011 forecasts, given an anticipated 5% decline in US beef production. However, if the US dollar continues to remain weak and global beef demand continues to improve, particularly in the Asian markets, amid a global decline in beef supplies, incentives to sell beef abroad may outweigh those on the US domestic market.