August 7, 2006

Tyson and Cargill ship beef to Japan and cut production

Tyson and Cargill, two top US beef producers last week made their first sales of US beef to Japan since that market reopened last week.

However, both said high temperatures have forced them to cut production due to poor domestic demand.

Japan last week lifted its ban on US beef, which began in December 2003 when the US reported its first case of mad cow disease.

Tyson said it is shipping out up to five loads of beef. A load could be up to 40,000 pounds.

Meanwhile, Cargill's deliveries were due to arrive in Japan within a week.

It is believed it will take years before sales US beef to Japan return to the 2003 level because of worries about the safety of US beef. Furthermore, after the US beef was banned, beef from Australia and New Zealand have filled the gap and it would be very challenging to compete against them, an industry source said.

Both companies also said they have reduced beef production due to poor operating margins amidst the hot weather.

Tyson suspended cattle slaughter for one day last week at 3 of its plants while the rest of its six beef plants are scheduled to lower production this week. Some of the plants would be operating at 35 percent of normal slaughter, said a Tyson spokesman.

Cargill and other beef companies have also reduced production.