November 15, 2004

Global Beef Exports Forecast To Rise 6.5 Percent in 2005

Following the release of USDA official statistics on October 21, 2004, a framework agreement to resume trade was reached between the United States and Japan on October 23, 2004.  While shipments could resume by early 2005, the estimates do not reflect the impact of the framework agreement.  Necessary regulatory procedures have not been completed in either country and the level of expected trade is dependent on the timing and outcome of this work.  USDA will update the estimates as more information becomes available.  The following discussion reflects the situation prior to the framework agreement.

In 2005, total beef exports from leading suppliers are forecast to rebound, increasing to nearly 6.6 million tons following 2004 projected declines because of import bans due to bovine spongiform encephalopathy (BSE).  Export growth will come from South America as export markets open in response to disease eradication efforts and improved price competitiveness due to favorable exchange rates.  Exports to the European Union (EU), a traditional market for South American beef, will grow as EU producers limit production in order to adjust to Common Agriculture Policy (CAP) reform.  In addition, smaller markets will have to import from non-traditional suppliers or import less as Australia and New Zealand shift a greater proportion of their exports to Japan and Korea.  U.S. exports are forecast to increase by 70,000 tons in 2005, reflecting a continuing recovery of exports to those countries that have reopened their markets to U.S. beef.  However as restrictions and bans on U.S. beef in Japan and Korea continue, U.S. exports will be less than one-fourth of 2003 levels and the United States will have dropped from the third to the ninth largest exporter of beef in the world.

Total beef exports for leading suppliers are projected at 6.2 million tons for 2004, revised upward 5 percent from the March 2004 estimate, but lower than 2003 due to BSE.  For major suppliers in South America, the 2004 estimate is revised upward to reflect increases following the relaxation of some import bans due to Foot and Mouth Disease (FMD).  The 2004 estimate for U.S. beef exports is revised upward to reflect the reopening of Mexico and Canada as well as secondary markets.

Imports in 2005 are forecast to be 4.8 million tons, or 4 percent higher than 2004.  Aggregate consumption in major markets will remain relatively unchanged from 2004 to 2005 due to higher prices and tighter supplies.  Production will decrease marginally in the European Union due to CAP reform and in Australia, and New Zealand as producers rebuild cattle herds following high slaughter rates due to periods of drought and high beef prices.  In the United States, production is forecast to remain relatively unchanged due to low cattle inventories and imports are forecast to increase 2 percent.  The United States will remain the largest beef importer in 2004 and 2005.  Total beef imports for major markets are forecast at 4.6 million tons for 2004, revised upward 3 percent from the March 2004 estimate.  Japan is importing more from Australia and New Zealand to make up for reduced imports due to bans on North American beef.  The European Union is forecast to import more from South America.