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Agricultural News

Peel Finds International Beef Trade Situation Improving

Mon, 11 Jan 2016 14:22:39 CST

Peel Finds International Beef Trade Situation Improving Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist, writes in the latest Cow/Calf Corner newsletter.

The latest international trade data for November confirms that the trade picture for beef and cattle is recovering from the dramatic changes in recent months. A variety of factors contributed to the adjustments in beef and cattle imports and exports late in 2015.

November beef imports were down 26.6 percent year over year, the second monthly decrease following a 12.9 percent year over year decrease in October. Total beef imports for the first eleven months of 2015 are still up 19.7 percent. Beef imports were down most dramatically from Australia, with November imports 43.5 percent lower than one year earlier. For the year to date, imports of Australian beef are up 25 percent year over year. Australian imports dropped sharply in the fourth quarter in part because Australia reached their import quota limit and faced increased over-quota tariffs. Australia will start over with a new quota in 2016 but there is reason to expect beef imports from Australia to decrease sharply in 2016. Low cattle numbers and improved drought conditions in some regions of Australia will likely restrict beef exports from the country this year. November beef imports were also down from Canada and New Zealand compared to last year. Beef imports from Mexico continue higher, year over year, but at a slower pace in October and November compared to earlier in the year. The four major import sources of Australia, New Zealand, Canada and Mexico, accounted for 87.3 percent of total beef imports with Brazil, Uruguay and Nicaragua each accounting for less than five percent of total imports.

Though U.S. beef exports are down 12.3 percent for the year to date, November beef exports closed the gap, with monthly exports down a scant 0.8 percent from one year ago. November exports were up in several major markets including Mexico, up 11.8 percent following a 13 percent increase in October; Hong Kong, up 7.8 percent; South Korea, up 7.6 percent; and Canada, up fractionally compared to last year. Beef exports to Japan remain very weak, down 28.8 percent compared to November one year ago. The top five beef export destinations of Japan, Mexico, Canada, South Korea, and Hong Kong make up 81.9 percent of year to date beef exports, with Taiwan and a host of smaller markets making up the balance of beef exports.

Live cattle imports also adjusted in November, especially from Mexico. Cattle imports from Mexico were down 29.7 percent, reducing the year to date total to a 10.2 percent increase year over year. Total cattle imports from Canada were down 58.9 percent year over year in November, with the year to date total down 31.1 percent. Year to date Canadian cattle imports through November are made up of roughly 44 percent feeder cattle and 56 percent slaughter cattle. Total feeder imports from Mexico and Canada are down 1.3 percent through November while slaughter cattle imports (from Canada) are down 35.5 percent year over year.

The changes in beef and cattle trade going into 2016 are driven primarily by the adjustments in beef and cattle prices in late 2015. For several months there has been much discussion about the impact of the strong dollar on trade. The current adjustments are occurring despite a continued strong dollar and remind us that exchange rates can exaggerate or reduce market signals but are not, at least not in the case of beef at this time, the principal market signal. The strong dollar is likely to continue in 2016 and will continue to marginally stimulate beef imports and restrict beef exports. Despite this impact, beef imports are projected to decrease 12 to 15 percent in 2016. Beef exports will recover more slowly and are projected to be more or less unchanged in 2016 after dropping sharply in 2015.


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