July 17, 2013

Mexico-US cattle, beef trade boosts US imports of Mexican beef 

Changes in cattle and beef flows between the US and Mexico have significant implications for the cattle industries on both sides of the border and indicates that the Mexican cattle industry is undergoing rapid and dynamic change.

The newest component of the increasingly complex and integrated US-Mexico cattle and beef industries is the rapidly growing imports of Mexican beef into the US. US imports of Mexican beef have increased rapidly in the past four years, resulting in Mexico becoming the fourth largest source of US beef imports. However, imports of beef from Mexico for the month of May were down just over 4% over-year. This may not signify a new trend but it is significant as it represent the first decrease after 48 months of double digit over-year increases.

US beef exports to Mexico have been decreasing since 2008. For most of the intervening period, a combination of high US beef prices and a weaker Mexican Peso have made US beef more expensive in Mexico and restricted US beef movement into Mexico. Mexican beef prices have risen significantly over the past 20 months to catch up with US prices and bring domestic beef prices closer to a balance with imported beef prices.

Though US beef exports continue to fall, the decrease in the past two months has been lower and may indicate that US beef exports to Mexico will stabilise. US beef exports were down an average of 12% over-year for the past two months compared to average decreases of nearly 36% for each of the preceding 11 months.

More evidence of a tightening cattle and beef supply in Mexico lie in a data on Mexican cattle imports into the US which have increased in 2011 and the first half of 2012 as strong US markets and severe drought in northern and central Mexico forced significant cattle liquidation. Despite dropping sharply in late 2012, total Mexican cattle imports for the year totalled nearly 1.5 million head. 

This total included over 384,000 spayed heifers, a figure which is more than usual. In fact, US imports of Mexican steers were actually down in 2012. So far in 2013, total imports of Mexican cattle is down nearly 43%, over 406,000 head, compared to last year, based on weekly data through the end of June. Mexican heifer exports to the US are down more than 57% over-year for the year to date. It appears that in Mexico, much as has happened in the US, significant female liquidation has occurred the past several years. Mexican beef production, cattle exports and perhaps beef exports may be curtailed for the next couple of years at least.