August 26, 2013

 

 

While the drop in Mexico's cattle exports to the US for fattening could see a temporary revival, the USDA's Mexico City bureau has cut to 1.2 million head in its forecast for the country's live cattle exports in 2013, implying a 22% slump on a record 1.54 million head shipped in 2012.

 

The downgrade reflects rains which have eased drought conditions, boosting prospects for domestic pasture and feed grain crops - and prompting ranchers to turn to herd rebuilding rather than selling off stock.

 

Indeed, the Mexican cattle industry "is optimistic that seasonal and normal rains will permit cattle inventory recovery in the coming years", after a decline in the herd to a forecast 50-year low this year.

 

However, the bureau's estimate implies a marked improvement in the import rate for the latter months of 2013. With imports averaging 62,000 head in the first five months, the estimate signals an average of 1,100,000 head a month from July-to-December.

 

"Exports customarily ramp up at the end of each year," it said. Shipments to the US could prove especially firm, given new facilities in the Mexican state of Nuevo Leon being close to the border.

 

"The new export pen at the Colombia crossing point could contribute to increasing Mexican live cattle exports to the US as the greater geographic accessibility of the pens could lower transaction costs," the bureau said.

 

However, any revival had not shown up by July 2013 in the US, when feeder cattle imports from Mexico of feeder cattle fell by 54% at 43,000 head. This followed a 45% decline in overall US imports of Mexican cattle in the first six months of 2013.

 

The low figure has fuelled doubts over some market expectations that feedlots may have raised placements last month, as some brokers have predicted, ahead of USDA cattle on feed numbers due later.

 

However, broker, Allendale, whose forecast of a 11.6% rise in placements was at the top of an unusually-wide range of analyst forecasts, flagged the impact of low grain prices in supporting feedlot margins.

 

"Cattle feeders are taking notice of cheaper corn coming this fall. Corn in western Kansas fell from US$7.30/bushel in June to US$6.92 in July," Allendale said.

 

The USDA bureau forecast Mexican calves rising in 2014 for the first time in four years, in a sign of better prospects for the country's cattle farmers due to sufficient rain and expectations for more.

 

Mexico's Comisi Nacional Del Agua (National Water Commission) has forecasted that rains should help increase grain yields over the initial 2013 spring-summer crop cycle which is harvested between November and January, the bureau said.