August 24, 2009

US beef exports continue to be hurt by weak economics by key purchasing countries, according to the most recent Livestock, Dairy, and Poultry Outlook from the USDA's Economic Research Service.

The US is expected to export about 1.7 billion pounds of beef this year, down nine percent from the previous year.

US beef exports in the second quarter totalled 471 million pounds, a slight decline from 472 million pounds in the second quarter of 2008.

The lack of growth was mainly due to declining sales to North American partners. Sales to Mexico, the largest importer of US beef, decreased 14 percent on-year in the second quarter, while exports to Canada fell seven percent.

Japan was the best performing major market, with shipments there up nearly eight percent on-year in the second quarter. US beef continues to benefit from the more expensive Japanese beef and from a relatively weak US dollar compared with the Japanese yen.

Sales to South Korea continue to wane from the levels first seen after US beef was allowed back into the market in July 2008. The poor sales were attributed to combined factors of weak restaurant demand, weak South Korean won and high stocks of frozen US beef.

Second quarter exports to South Korea totalled 20 million pounds, less than half the amount exported in the first quarter.

In 2010, the availability of beef supplies is likely to hold back export growth. The supply of grain-fed beef for export will be lower, as fat cattle production is expected to drop sharply next year due to smaller calf crops and fewer feeder cattle. 

If US demand remains stable or improves next year, the tighter supplies will lead to higher prices, which could further erode the competitiveness of US beef against Australian beef, particularly in Japan and South Korea.

Exports to South Korea are not expected to be as high as anticipated when the market reopened to US beef last year because economic difficulties appear to persist, and many small restaurants are not yet carrying US beef products.

US beef exports are expected to total more than 1.8 billion pounds in 2010, which would still be a seven-percent increase from this year, as global demand for US beef continues to move toward levels that existed before BSE-related trade bans on US beef.