CattleFax Analyst Shares Why Quality is the Secret to Retaining Our Competitive Edge InternationallyTue, 18 Jul 2017 11:29:30 CDT
Trade is always significant in the beef business, but this season of the cattle cycle puts an exclamation point on that fact.
“If we think about the cattle side just from a cattle cycle nature we've expanded the beef cow herd by over two million head over the last two years which means we've got bigger supplies for at least the next two to three years to work through. And of course, pork and poultry supplies are up as well they're profitable with the lower input cost,” said Kevin Good, CattleFax senior analyst. “So, you roll that all together we've got more protein to consume not only domestically but hopefully that trade number will continue to grow so we can export more as well.”
To watch a video clip featuring Kevin Good, of CattleFax, talk about supply and demand, and how important high-quality beef is to the trade equation, click or tap the PLAYBOX below.
Resuming beef trade with China gives us strong “headwinds,” Good says.
“Well as we think about the global protein supply is growing slowly, one to two percent a year that's kind of offsetting plus a little bit the population growth,” he explained. “As we think about the spots around the globe that produce protein the most cheaply it's the US as well as South America. So, from a long-term perspective in a lot of the proteins that's where our competition will come from.”
The key advantage the U.S. has over other exporters continues to be the kind of beef product America’s cattlemen deliver.
“Well if you think about quality it's a big part of that,” Good concluded. “You know the US product is a gold standard, you know choice and above. In particular is a gold standard from the US in a global market. In addition to that if we came back and looked at the domestic demand we can really see this year in particular Choice grade was up 1 percent in 2016, it's right at 70 percent. Prime grade was up it's at 5.6 percent compared to 5.1 the year prior, despite that producing more Choice and Prime product. The Choice-Select spread was wider in '16 by three dollars over '15 and the premium product spreads are widening out as well. Which tells us that the consumer has the taste and preference for top two-thirds Choice and above product.”
Those market signals point to more open doors for the best beef.
Source - Certified Angus Beef
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