Global Trade Outlook
CattleFax shares outlook for 2012 global market.
by Kasey Miller for Angus Productions Inc.
NASHVILLE, Tenn. (Feb. 3, 2012) — Declining global beef supply and increasing global beef demand means that rising global prices will continue their upward trend, Brett Stewart of CattleFax told the CattleFax Outlook audience at the 2012 Cattle Industry Convention and NCBA Trade Show in Nashville, Tenn., Feb. 3.
U.S. beef exports were at a record high in 2011, with 2.83 billion pounds (lb.), resulting in $4.7 billion, plus $694 million in variety meat exports and $1.5 billion in hides.
Brett Stewart Photo by Kasey Miller
Markets have shown that diversifying with the export markets adds $261 in value to the price of market heifers and steers, Stewart said. Many are cautious about how dependent the beef industry should be on export markets, but dependence has lessened on the domestic market, so Stewart said that the risk is worth it right now.
Currency is a major issue with export markets, especially with large fluctuations in the Euro. He mentioned that the U.S. dollar index is at 65%, and a good deal of it is weighted in the Euro currency.
Global beef prices will continue to rise, Stewart said. In 2011, they were 17% higher than 2010 and 57% higher than the 10-year average. Factoring into that increase is the fact that global beef production is shrinking, down 3.4 million tons, while demand is rising, with global population up 300 million. Stewart said that prices should be high and stable in 2012.
Brazil is increasing its cow herd, while the U.S. national herd is declining, Stewart said. Argentina and Australia are increasing, but have been pretty stable, by and large. Brazil’s per capita income is rising, so Brazilians are eating more beef domestically, which puts pressure on their export numbers.
Exports to Asia have the most growth potential, Stewart said, because they have limited resources, rising incomes and are in a beef deficit. Brazil doesn’t compete in Asia, instead targeting Russia, the European Union (EU) and the Middle East. With Brazil consuming more beef domestically, this allows for U.S. growth in Brazilian markets.
Other export markets have also grown, partly due to the United States' case of bovine spongiform encephalopathy (BSE) in 2003. In the early 2000s, the biggest U.S. markets were in Japan, Mexico, Canada and South Korea. Japan was substantially the largest importer, but after the BSE case, that market drastically declined.
“BSE helped develop other markets by necessity,” Stewart says. Now that Japan is back on board, U.S. export markets are in even better shape.
Stewart concluded with several key points:
- Global supplies remain tight, so price inflation will increase and remain high in 2012.
- CatttleFax expects that Japan will relax beef access sometime in the second quarter, which will be worth $50 a head in added value to U.S. cattle.
- U.S. exports are expanding into lesser markets, which will add stability.
- He said to expect more growth into Brazilian markets (Russia, the EU and the Middle East) and continued growth in Asia.
- There will be strong export growth and slight import growth in 2012, exporting more than 300 billion lb. and importing just more than 2 billion lb.
-----------------------------
Editor’s Note: The above article was written under contract or by staff of Angus Productions Inc. (API). It may not be reprinted without express permission of API. To request reprint permision, contact the editor at 816-383-5200.
www.4cattlemen.com is an event coverage site provided by the editorial team at Angus Productions Inc. (API), publisher of the Angus Journal, the Angus Beef Bulletin, the Angus Beef Bulletin EXTRA and the Angus e-List. For questions about this site, to submit an article for our consideration, or to report a broken link, contact the editor at 816-383-5200; 3201 Frederick Ave., Saint Joseph, MO 64506.
API claims copyright to this web site as presented. We welcome educational venues and cattlemen to link to this site as a service to their audience.