November 11, 2005

USDA: Japan livestock and products annual report 2005
 

Assuming no U.S. or Canadian beef imports will mean that many Japanese food businesses will continue to face a supply deficit in 2006, high market prices and constrained alternatives due to non-availability of grain fed cuts. Despite Australia and New Zealand's efforts since 2004 to fill the gap by boosting exports, the market is still in a supply deficit due to the lack of specific cuts and quality of meat that has traditionally supplied by the U.S. and Canada.

However, there is no significant increase in total beef imports in 2006 forecast in this report since Australia and New Zealand alone will likely have difficulty in boosting their export volume any further unless Australia finds a way to sustain the high number of cattle in feedlots though 2006.

Japanese cattle inventories are expected to continue their gradual, but continuous decline allowing for a slow increase of imports in the future.

Specific import restrictions for US beef will not be known until after the Food Safety Commission review is completed. However, it is expected that the demand for US beef, once imports are resumed, will be dependent on the following measures:  1) Cut off age (20 months or younger) under the Export Verification program (EV), 2) Lifting import ban by other Asian countries, and 3) Possibility of beef safeguard (SG) plus the foreign exchange situation. 

Assuming that U.S. and Canadian beef are being imported, there is a good chance that total beef imports (generic) for 06 April - June will exceed the trigger levels resulting the SG from August 1, 2006 for both chilled and frozen beef though March 31, 2007. 

An artificial tariff hike from 38.5% to 50% (bound duty), if imposed, will likely hamper the recovery of beef consumption and hurt the retail and food service sectors as well as consumers. Concerned parties among the domestic meat sector and key beef exporting countries are expected to work together to argue that the safeguard system should be adjusted to take into account the unusual nature of this market situation.

For the full USDA report, click here.