December 7, 2012

 

 

The US exported nearly 10% of the beef produced in 2011 which should at least hold steady this year against only 2% a decade ago.

 

The beef industry is sailing along on a high tide these days, with record prices for all classes of cattle. It wouldn't be possible without a very healthy meat export trade.

 

If you say Asia, you're only partly right. The biggest recipients of US beef are our immediate neighbours to the north and south, Canada and Mexico. They flip-flopped in the last year, with Canada moving slightly ahead.

 

A lot of low-value organs, hides, and by-product meats go to Mexico. Canada takes higher-value meats, due to the fact that their beef industry has reeled since the BSE outbreak a few years ago. Behind our next-door neighbours on the export list come the Asian tigers, with Russia thrown in the middle.

 

Put the tigers together, they barely take more US beef than either Canada or Mexico. But put them together on a value basis, and they are worth nearly double the sales to Mexico because the Asians buy more high-value cuts.

 

Add up all the exports and they are worth US$6.9 billion, or an extra US$261 per head marketed last year. That's over 20% of the entire value of all cattle harvested. Without it, the US would be in trouble. Poultry and pork have a similar story, with exports representing an even bigger slice of their pies.

 

The US probably will not continue this export growth in 2012; there just are not enough cattle supplies to go around. And high prices will eventually curtail the export demand. CattleFax, the industry economic outlook firm, says beef prices on a global scale have been up 20% in each of the last two years, and the US is getting priced out of new demand.

 

But the demand from Asian countries is not going away, says CattleFax market analyst Brett Stuart. Consider their dominance when it comes to global food demand. The bulk of the world's population lives there, they are beef-deficit, and they are getting a little taste of affluence.

 

While the US economy is expected to grow about 3% annually over the next few years, Asian countries will grow at more than 5%. With their huge populations, that's a lot of purchasing power.

 

In the US, the big problem is finding enough hamburger beef. Fast-food burgers are taking an ever-bigger slice of beef supplies – nearly one third. The price for beef chuck and trim beef, both grinding sources, has increased by 40-50% in the last five years, which is a bigger bump than other cuts.

 

Cull cows, the other big source of hamburger, are also in high demand. They are expected to average US$0.80 a pound this year, says CattleFax, and may top out even higher. The US has traditionally imported hamburger beef from Australia and New Zealand when more is needed, but their inventory is tight, too. And the weak US dollar discourages imports.