December 9, 2005

 

US-Japan pork trade seen little affected from any beef deal

 

 

US pork exports to Japan are expected to be affected very little initially from the much-awaited reopening of the Japanese market to US beef, according to some market analysts.

 

On Thursday, Japan's food safety commission approved a report on the safety of US beef, a major step toward the reopening of Japan's ban on imports of US beef that has been in place since late December 2003.

 

However, upon the lifting of the ban, beef sales to Japan from the US likely will be very slow initially, analysts said.

 

Japan has imported more US pork since it placed a ban on imports of US beef following the discovery on Dec 23, 2003, of a cow in Washington state with mad-cow disease. The resumption of beef trade with Japan could displace some of the sales of US pork there, industry sources have said.

 

Dan Vaught, market analyst with A.G. Edwards and Sons in St. Louis, said if Japan announces soon that it is lifting the ban, as many people expect, he thinks it will take a while--probably three to four months--before there will be a significant volume of beef exported to Japan. Further, he projects that sales of US beef to Japan for 2006 could be only about 25 percent of the volume that was shipped in 2003.

 

Based on the relatively small amount of beef predicted to be shipped to Japan in 2006, especially early on, pork sales there likely will not be affected in the short term, Vaught said.

 

Japan ranked as the US's largest international customer for pork through the first nine months of 2005, with 270,523 tonnes, or about 31.8 percent of total pork exports. Mexico and Canada were the second and third largest international purchasers of US pork.

 

Don Roose, analyst with US Commodities in West Des Moines, Iowa, said the resumption of beef shipments to Japan could start slower than some people think. "It will take some time," he said.

 

Roose said Japan's ban on imports of US beef "definitely has had a positive effect on pork as well as poultry sales there, so the reopening of its borders to US beef could affect pork and poultry. However, Japan "can open its market (to beef), but we still have to have consumer acceptance," he said. "We look for a slow reopening."

 

Roose said the reopening of the Japanese market to US beef would be a "minor negative to the pork market and a minor positive for the beef complex".

 

Looking at lean hog futures, he said the premiums that are built into futures "are probably already a bit too much-meaning futures are overstated".

 

Vaught said much of the growth in pork exports the past two years has been to other countries, so a decline in sales to Japan might be absorbed by the other markets.

 

Also, what may be a "bigger deal," Vaught said, for the pork and poultry sectors than Japan's likely lifting of its US beef ban is what happens with high pathogenic bird flu cases around the world. If there is a major outbreak of human cases of bird flu, people could be reluctant to eat poultry, so exports of US beef and pork could grow. If the disease remains mostly in birds, for countries that have confidence in consuming poultry, US poultry sales abroad could increase.