Meat exports CattleFax predicts eight percent increase
CattleFax is calling for an increase in demand, combined with an overall shorter global supply, which will result in an increase in U.S. meat exports in 2011.
“We’re calling for beef exports to be up this year by about eight percent. From 2010, the International Marketing Federation (IMF) food inflation index is up 28 percent for global food, and 2011 is the fourth consecutive year of global beef production declines,” says Stuart of the current global situation.
“Looking at the competitive situation, in terms of tonnage and where the exporters lie, Brazil was up four percent in 2010. Australia was down a little bit, and will probably restock this year as they climb out of the swamp from the floods in the last quarter. U.S. exports were up 17 percent. Looking at the European countries, they continue to decline and be bigger importers of beef, and we’ll see that trend continue,” says Stuart.
“We’ve got the Korean Foot and Mouth Disease (FMD), and they’ve culled a lot of cattle and hogs. They’ve culled over 2.3 million hogs, and over 300,000 cows,” comments Stuart.
He continues, saying that in early February the U.S. had outstanding sales to South Korea of about 24,000 tons.
“That’s how much beef they have booked from us that is yet to ship. A year ago that was about 9,000 tons. This FMD deal has run meat inflation through the roof in Korea, and they’ll be big buyers of U.S. meat, particularly beef and pork over the first quarter. We may see those pork shipments up 50 percent in the first quarter to Korea,” says Stuart.
On the other side of the export coin is the current situation in Russia.
“They’ve cut their pork and poultry by about half. We used to ship about 800,000 tons of poultry to Russia each year. Our quota this year will be about 275,000 tons. That’s a major factor when looking at the whole protein balance sheet,” notes Stuart.
Access to some countries continues to be restrained, and the U.S. is still working to get volumes back to pre-BSE levels in Japan.
“Our exports to Japan in 2010 increased 40 percent. Our exports to Korea in 2010 increased 94 percent. As we continue to gain access and see demand grow, we’ll be able to get some of the key market shares away form Australia,” notes Stuart.
“China is a real wildcard. In the last two years China opened to Argentine beef imports, and they’re opening to Canadian imports. That was a market that was very well protected, and to me it gives an indication that the Chinese government is willing to consider imports. I wouldn’t be surprised to see something shake loose with China in the next year,” comments Stuart.
“We’re saying we’ll be up eight percent on exports. I’m not saying we’ll be up 18 percent in exports this year, but I’m not saying we won’t be. It’s entirely possible, because we’re constrained by some of these access issues,” says Stuart.
On the import side, Stuart says CattleFax is calling for an increase of two to two-and-a-half percent.
“One of the reasons I don’t have that higher is I don’t know where we’ll get more supplies. Supplies will be tight, and we’ll pull very hard on imported beef through this year and into next.
“When you think about our lean grinding beef, our McDonalds, our Burger King – our fast food hamburgers – there are three key sources to get that beef. We get some from our trim off fed cattle slaughter, we get some from cow and bull slaughter and we use imports to balance the rest,” explains Stuart.
The domestic beef cow slaughter rate started to decline in early 2011, following heavy beef cow slaughter rates for the last three years.
“I don’t know if that will bear through the year, but if we see those beef cow rates start to decline, where will we get that lean grinding beef? We know what our fed slaughter rate will be, roughly.
“We’re bidding record high prices today for Australian beef, and we’re getting some of it and we’re not getting some of it. I think we’ll see these trend prices run higher because of the tight supplies from our cull cows, and the tight supplies from overseas,” says Stuart.
“We’ve got meat and food inflation across the globe, and that won’t change. When you think about how much of this inflation has been fueled by grain and commodity prices, I don’t think we’re moving away from our policies that support these grain prices,” concludes Stuart.