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Agricultural News


Peel Says Unique U.S. Beef and Cattle Trade Situation Continues

Mon, 13 Jul 2015 11:51:32 CDT

Peel Says Unique U.S. Beef and Cattle Trade Situation Continues
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist, writes in the latest Cow/Calf Corner newsletter.


The unique U.S. beef and cattle trade situation that developed in 2014 has continued in 2015. Falling beef production is keeping beef supplies tight and prices near record levels in the U.S. This discourages beef exports and attracts more beef and cattle imports. Both imports and exports are further enhanced by the strong dollar. Though dollar appreciation has leveled off recently, continued global macroeconomic uncertainty is likely to keep the dollar strong for the time being.


In May, beef exports decreased 14.4 percent year over year with exports to all major export destinations (Japan, Canada, Mexico and Hong Kong) down except South Korea which was unchanged from last year. Year to date beef exports are down 9.5 percent from last year. May beef imports continued larger year over year with the monthly total up 24.8 percent from one year ago and up 37.3 percent for the year to date. Beef imports in May were up most from Australia and Mexico among major sources and were also up sharply from smaller sources including Brazil and Uruguay. Total cattle imports in May were down 10.3 percent from last year and are down 9.2 percent year over year for the year to date.


The dramatic increase in U.S. beef imports in 2014 and so far in 2015 has been led by increased imports from Australia. This is the result of unique circumstances in Australia as well as the U.S. U.S. imports of Australian beef were up 41 percent year over year in May and are up 64.8 percent for the year to date. This follows a 74 percent year over year increase in 2014. A prolonged drought in Australia has led to increased slaughter, beef production and beef exports along with decreased herd inventories. The Australian beef cow herd has declined over 1 million head since 2013. Though the drought continues in Australia, it appears that cattle slaughter and beef production have peaked. Beef production is expected to decrease in 2015 and may lead to decreased U.S. imports of Australian beef in the second half of the year. At the current pace, Australia could hit the beef tariff rate quota by this fall. Beyond 2015, U.S. imports of Australian beef are not likely to grow and will decrease when drought conditions permit herd rebuilding in Australia.


In Canada, declining herd inventories is resulting in decreased feedlot production, beef production, and cattle exports. U.S. beef exports to Canada were down 15.6 percent in May compared to last year and are down 12.9 percent for the year to date. U.S. imports of Canadian beef were up a scant 1.2 percent year over year in May and are up 4.5 percent for the year to date. In the face of declining Canadian beef production, imports of Canadian beef may drop below year earlier levels in the last half of 2015 and may decrease year over year on an annual basis. Decreased imports of Canadian cattle are led by a 47 percent year to date decrease in slaughter steers and heifers and a 27 percent year decrease in slaughter cows and bulls compared to one year ago. Year to date imports of Canadian feeder cattle are unchanged from last year but the composition of those imports is significantly different compared to last year. After jumping sharply last year, imports of feeder heifers are down 21 percent compared to last year while steers are up 48 percent year over year. This may indicate planned heifer retention in Canada. However, severe drought conditions in the Canadian prairie this year is likely postponing herd rebuilding and may contribute to additional herd liquidation.


So far in 2015, U.S. imports of Mexican beef have continued to expand, up 26 percent in May and up 39 percent for the year to date compared to last year. Beef exports to Mexico dropped 33 percent year over year in May and are down 23 percent for the year to date. U.S. imports of Mexican cattle were up 27.6 percent in May and are up 8.1 percent year over year for the year to date. Imports of Mexican heifers for the year to date are 23 percent below year ago levels while steer imports from Mexico are up 15 percent so far this year. In 2014, imports of Mexican heifers were up 23 percent year over year. Decreased exports of heifers from Mexico may be an indication of heifer retention. Forage conditions in Mexico are generally good and supportive of herd expansion. Mexico's ability to maintain cattle exports and increased beef exports may be constrained if herd expansion accelerates.


   

 

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