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Agricultural News

U.S.-Mexican Cattle and Beef Trade Continues to Evolve

Mon, 17 Jun 2013 10:32:48 CDT

U.S.-Mexican Cattle and Beef Trade Continues to Evolve
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist, writes in the latest Cow-Calf Newsletter:

Mexico has long been a major beef industry trading partner with the U.S. in roles that have continually evolved into deeper and more integrated relationships. For many years, Mexico has been the major source of imported feeder cattle. U.S. beef exports to Mexico developed in the late 1990s and Mexico has been one of the top beef export destinations since then. Most recently Mexico has emerged as a top source of beef imports into the U.S. All of these markets have been rather dynamic in recent years and raise the question of what the nature of U.S. and Mexican cattle and beef trade will be in the future.

Since 2009, U.S. imports of Mexican beef increased by 268 percent to make Mexico the fourth largest source of U.S. beef imports. Mexico exports beef to a number of countries including Japan, Russia and South Korea and Mexican beef exports have more than doubled since 2009. Beef exports to the U.S. represented just over 40 percent of total Mexican beef exports in 2012. U.S. imports of Mexican beef are up again so far in 2013 and are on pace to increase another 30 percent by the end of the year. Most of the beef imported from Mexico is middle meats from fed cattle. The dramatic increase in Mexican beef exports is the result of a rapid conversion of the Mexican beef industry from a carcass to a boxed beef marketing system. This has opened new market opportunities in both domestic and international beef markets. It is not clear how potentially large the market for Mexican beef in the U.S. is, but there appears to be room for additional growth.

U.S. exports of beef to Mexico have declined since 2008 and are declining again in 2013. Since 2008, a combination of higher U.S. beef prices and exchange rate impacts have made U.S. beef more expensive in Mexico and are undoubtedly the major reason for declining beef exports to Mexico. However, Mexican beef prices have risen sharply in the past 18 months and domestic beef prices in Mexico are once again close to U.S. beef prices. This may help stabilize U.S. beef exports to Mexico in the second half of the year. However, high beef prices in Mexico is curtailing consumption and it is hard to anticipate much increase in beef imports from the U.S. with both domestic and imported beef in Mexico at record price levels. U.S beef exports to Mexico are likely to level off and could recover some of the recent declines in the face of expected decreased domestic beef production in Mexico in the next couple of years.

High U.S. cattle prices and drought in Mexico resulted in large and growing U.S. imports of Mexican cattle since 2010. The 2012 total of 1.47 million head was the second largest level of Mexican cattle imports since the 1995 record level of 1.65 million head. Cattle imports from Mexico in 2012 included the largest number of spayed heifers ever imported while the number of steers actually decreased from 2011 totals. It is apparent that recent levels of cattle exports from Mexico are not sustainable and represent herd liquidation. The rate of cattle imports into the U.S. dropped sharply in late 2012 and so far in 2013. Total imports of Mexican cattle into the U.S. in 2013 are on pace to decrease by more than 40 percent and may drop even more. Total imports of less than 800,000 head are likely for the year. Mexican herd liquidation in recent years likely means diminished beef production in Mexico and diminished levels of cattle exports to the U.S. for several years.



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