October 23, 2012

US to face lower beef production for 2013

Forecasts by the USDA's Foreign Agricultural Service (FAS) show world beef production to rise again in 2013, following an improved output in 2012. 

In contrast, North American beef production is expected to decrease in 2013 with lower production in Canada, Mexico and the US. Total cattle inventories are forecast to be lower in the US and Mexico while Canadian cattle inventories may show modest growth after stabilising in 2012.

Total beef exports among major world exporting countries are expected to increase in 2013. Several major beef exporting countries are to see increased exports including India, now the largest beef (mostly water buffalo) exporting country, Brazil, Australia, and Canada. Mexico, which has increased beef exports dramatically in the last three years, is also expected to see continued growth in beef exports.

US beef exports for the year to date are down 12% from the 2011 record levels. Exports are down to most of the major US export customers including Mexico, down 21 %; Canada, down 17% and South Korea, down 26%. Only Japan is up over year by a modest 3%. However, US beef exports are up to Hong Kong, Russia and Vietnam. US beef exports are expected to decline again in 2013, following decreased exports in 2012.  Lower total beef production and high US beef prices will continue to challenge US beef exports. With lower beef production in the US, exports as a percent of production will likely hold constant.

Beef imports in North America are expected to increase in 2013 with larger imports in Canada, Mexico and the US. Total beef imports among major importing countries are also expected to increase in 2013 with larger imports in Russia, Japan, and South Korea along with the North American countries. US beef imports are up 13% so far in 2012. Year to date beef imports are larger from Australia, Brazil, Uruguay and Mexico, but are partially offset by decreased imports from Canada. US beef imports are supported by a strong hamburger market, reduced cow slaughter and increased lean demand as a result of the product deficit left by not using lean finely textured beef.

Live cattle trade in North America is also expected to decrease in 2013 with reduced cattle exports for both Mexico and Canada. So far in 2012, US cattle imports are up 16%, mostly from increased imports of Mexican cattle. However, much of the increased Mexican cattle imports in 2011 and 2012 were the result of drought liquidation in Mexico. Mexican cattle inventories, exportable cattle supplies and total production are all expected to be reduced in 2013. Reduced cattle imports will further squeeze feeder cattle supplies in the US in 2013.