7:30 a.m. - 10:45 a.m., Room 206 A/B

MA 102: Global Meat & Grain Trade — How Does the U.S. Stack Up?

Randy Blach, Duane Lenz, Dave Weaber, Mike Miller and Bill Chandler, all from Cattle-Fax.

Global meat trade outlook presented

U.S. beef products are up against some increasing competition for a share in domestic and global marketplaces , said Cattle-Fax Executive Vice President Randy Blach during Pfizer Animal Health’s Cattlemen’s College®, Feb. 2, at the Cattle Industry Annual Convention in San Antonio.

A variety of factors affect the delicate balance of beef exports and imports — and prices U.S. cattle producers receive at market. Issues such as reduced U.S. cattle inventories, competing protein sources, and trade barriers and associated consequences of animal health dangers like bovine spongiform encephalopathy (BSE) and foot-and-mouth disease (FMD), all play complicated roles in determining price and available markets.

Randy Blach, executive vice president of Cattle-Fax, explained why trade is so important to the U.S. beef market during the Global Meat and Trade session Feb. 2 at Cattlemen’s College.
According to Cattle-Fax figures, the United States will normally export 2 billion to 2.5 billion pounds (lb.) of beef on an annual basis. However, in the last 12 months, exports reached only approximately 450 million lb. Conversely, record imports increased to record-setting figures at nearly 3.7 billion lb. — providing what Blach called the biggest discrepancy between imports and exports in history.

Competing protein sources, like poultry and pork, have helped set the stage for the phenomenon, gaining in popularity while closing beef out of the global marketplace, Blach explained.

Most of the increase in poultry demand has originated from the United States in the last 20 years. The pork market, which owns approximately 25% market share worldwide, shares a similar status.

“We’re concerned about things like Brazil and Argentina and Australia investing in their infrastructure (for beef production), but we’re going to have a heck of a time rooting out the pork industry and getting our market share back from pork,” Blach said.

And with BSE-related trade barriers and the United States’ dried-up supply chains to countries like Japan and South Korea, worldwide supply of beef dipped last year, Mike Miller, Cattle-Fax director of business development, explained.

“The world market was shorted of beef in 2004 because there wasn’t production in other countries to replace what we lost,” Miller said, explaining figures showing a loss of 15 percentage points in the United States’ global market share from 2003 to 2004. “People ate more chicken and they ate more pork around the world because the United States was unable to export product particularly to two countries, Japan and South Korea.”

“We can’t continue at this pace just giving demand away. It will catch up with us,” Blach added, noting the importance of regaining Japan and South Korea, previously the No. 1 and No. 2 beef importers. The Cattle-Fax analysts expect at least some of that market share to open sometime in the second half of 2005, with variety meats making up a significant — and important — portion of exports.
Jim Reimann, president of Certified Angus Beef LLC, answered audience questions during an impromptu portion of the session featuring international market trends.

The Cattle-Fax representatives also identified possible countries full of promise and some of concern. China, although not feasibly a primary U.S. customer, leaves much room for expansion of beef exports in general. Other countries, such as Brazil, were recognized for their increasing beef production abilities and, therefore, heightened roles as competitive suppliers of grass-fed beef. Regardless, Blach maintained, the United States remains the world’s primary supplier of high-quality, grain-fed beef.

One country causing some concern seems to be Canada, where harvesting capacity has increased 25%-30% in the last 18 months and is expected to reach capacities of 95,000 harvested head per week by June or July. Blach said if the U.S. Department of Agriculture’s (USDA’s) plans for opening the border to certain Canadian cattle March 7 are realized, the United States could access 300,000 to 400,000 head of Canadian feeder cattle, which would tend to be bigger, heavier cattle, and approximately 600,000 Canadian fed steers and heifers during the course of this calendar year. Although Blach expects a systematic move rather than a large backlog of Canadian cattle flooding into the market, he said, “The bottom line is this. We’re going to have more capacity than we have cattle. Somebody’s going to kill fewer cattle. Who’s it going to be? Is it going to be us or is it going to be the Canadians?

“The market will tell us.We may not like the answer, but it will sort it out.”

— by Crystal Albers, assistant editor, Angus Productions Inc.
© Copyright 2005 Angus Productions Inc.

Editor’s Note: This article was written under contract or by staff of Angus Productions Inc. (API), which claims copyright to this article. It may not be published or distributed without the express permission of Angus Productions Inc. To request reprint permission and guidelines, contact Shauna Rose Hermel, editor, at (816) 383-5270 or shermel@angusjournal.com.