June 18, 2004

First-Quarter US Beef Imports Surge

Demand for imported lean processing beef has increased to unprecedented levels in the US as hamburger sales continue at a robust pace in the face of cyclically low cow slaughter.

Leading fast food chains reported strong year-over-year same store sales in spite of high ground beef prices. The supply of domestic lean processing beef has fallen to near-term record lows amid an expected 14 percent decline in 2004 cow slaughter. As a result, 2004 beef imports are expected to increase 14 percent - to a record 3.4 billion pounds - to augment lean meat supplies.

Imports in 2005 may be marginally smaller as imported supplies become more limited.

Beef imports in 2004 and 2005 assume imports from Australia and New Zealand remaining near historical levels. Record imports in 2004 are expected from South America and large imports are expected from Canada. Beef imports from Uruguay should remain high until its unusually large cattle inventory declines to a more normal level. A record-large inventory in Uruguay accumulated while beef exports remained banned between mid-2001 and mid-2003 because of foot and mouth disease.

Imports of heat-treated product from Brazil and Argentina should remain high because of strong domestic demand for near ready-to-eat microwavable foods.