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Cattle and Beef Prices Respond to Increased Exports

 

by Troy Smith for Angus Productions Inc.

DENVER (Feb. 4, 2011) — Exports are important to U.S. beef producers, said Cattle-Fax Market Analyst Brett Stuart, speaking at the Cattle-Fax Outlook Seminar during the 2011 Cattle Industry Convention in Denver. While exports account for only 10% of total U.S. beef volume, Stuart said the impact to prices received at all levels of production is much higher.

 

According to Cattle-Fax expectations, global beef supplies will decline for the fourth consecutive year. Tight supplies have resulted in higher prices. The U.S. dollar equivalent of global beef exports is rising at an average rate of $2.25 billion annually.

 

Stuart said 2010 U.S. beef exports increased by nearly 20%, reaching 90% of pre-BSE volume. Seventy-five percent of exported U.S. beef goes to five countries: Mexico, Canada, South Korea, Japan and Vietnam. Stuart expects exports to increase in 2011 by 8%, with the Asian countries claiming most of the increase. The increase in shipments to Mexico and Canada are likely to be modest.

 

While tight global supplies are increasing demand for U.S. beef, Stuart said, they have also reduced the availability of lean grinding beef for U.S. processors. They will have to bid more for imported grinder beef and pay higher prices for domestic trim beef used in “fast-food” hamburger. The likely result will be a modest increase in imported beef, of about 2%.

 

Stuart said tight global supplies should continue to spur demand for U.S. product, noting foreign markets other than the top five listed above. But their collective purchase volume now rivals the No. 1 U.S. customer — Mexico. Stuart said he expects good things from ongoing negotiations with a promising potential market

 

“There are no results to report yet, but I wouldn’t be surprised to see a deal made, in the next year, to ship beef to China,” offered Stuart. “And while we’ve been waiting for Japan to open up, with slow progress, when it does happen, it should bring a dramatic increase to the market.”