October 11, 2004

 

 

US Meat Prices Could Rise If Japan, Korea Resume Beef Trade

 

If Japan and Korea resume trade of beef exports from the United States in the next 30 days, competing meats such as pork and poultry could be priced higher than normal during the holiday season, a Texas Cooperative Extension economist said.

 

"If we do see the Japan and Korean markets open up, and it puts upward pressure on prices, then we could certainly expect to be seeing competing meats get more expensive as well," said Dr. Parr Rosson, Extension economist and director for the Center for North American Studies at Texas A&M University.

 

"(If an agreement is reached) we would be going into the holiday season where we traditionally see very low prices for turkey and poultry products," he said. "Instead, we probably will be facing higher prices than seasonally expected, due not only to higher seasonal demand, but also to higher prices of beef products, especially since the US beef supply is relatively low."

 

Rosson said if the United States opens the market to Canadian cattle, "any upward price movement would be mitigated by additional beef supplies, so it's most likely a wash."

 

Both Japan and Korea have banned US beef exports since the discovery of mad cow disease in Washington state in December 2003. Japan accounted for about $1.2 billion in beef purchases from the United States prior to the ban. Negotiations continue as US agriculture officials attempt to reach an agreement with the two countries on resumption of trade.

 

"Right now, negotiations center on the US being able to export beef and cattle that are 24 months or younger, while the Japanese prefer only bringing in cattle 20 months or younger," Rosson said. "The Japanese claim they have detected disease in one particular animal that was 21 months. Their concern is anything older than 21 months could possibly contain the prion (infectious agent) that may be the cause of BSE (bovine spongiform encephalopathy or mad cow disease). However, scientific evidence from US and other country studies indicate that BSE has not been detected and is not likely present in cattle under 30 months."

 

The United States has tested more than 70,000 beef cattle since June, Rosson said, as US agriculture officials hope to test 268,500 cattle by June 2005.

 

"If that gets done without any detection of BSE, the US will regain disease-free status," he said. "Then the age of cattle may become a moot point. But for right now, we're looking at a 20 months or less to for exports to Japan if an agreement is reached."

 

If Japan opens its market, Korea will likely soon do the same, he said. "That will be the largest two markets for beef that will be reopened. That's going to put some upward prices on cattle prices and retail beef prices.

 

"The other variable is what is going to happen with imports of Canadian cattle."

 

Rosson said since live imports of Canadian cattle have been closed since May 2003, already-low inventories of fed cattle in the United States have been further depleted.

 

"If we don't begin to bring in more Canadian cattle with the reopening of Japan and particularly Korea, then we are likely in for a period of higher prices than we've seen over this past summer."

 

High-quality steaks and other high-end cuts are exported to Japan and Korea, he said, distributed to not only upscale supermarkets, but to restaurants as well.