Beef exports expected to slow
A rising dollar, slowing global economies and higher beef prices are taking some of the edge off this year's U.S. beef export pace.
After a strong start to the year, U.S. beef exports for calendar 2012 are expected to slow in the last half of the year and finish slightly below 2011's record level, says the U.S. Meat Export Federation.
Because of rising beef prices this year, the value of January-May beef exports ($2.2 billion) rose 5 percent above 2011's record, says USMEF economist Erin Borror.
For cattle producers, the value of those Jan-May beef exports (including variety meats) averaged $209.97 per head of fed-cattle slaughtered during the period, up from $193.73 a year earlier, she says.
But on a volume basis, January-May beef exports fell 10 percent from the previous year, to 456,343 metric tons. Assuming about 570 pounds of boneless muscle cuts and variety meat from each head, Jan-May beef exports were the equivalent of shipping about 1.76 million live cattle overseas -- a hefty number but nonetheless a drop from the previous year.
"We face some headwinds this year on beef export volumes," says Borror. "And with cow numbers down, U.S. beef supplies could be tight for years."
The drought is forcing liquidation of breeding cows, which provides hamburger but not the high-quality cuts that make up the bulk of U.S. beef exports. Borror warns that the impact of declining numbers of corn-fed cattle could be felt on U.S. beef exports as far out as 2014-15.
Rising prices for U.S. beef are running into some resistance overseas, although there will always be tourist hotels and other high-end buyers that will pay virtually any price. But overall, overseas meat buyers are finding a widening gap between U.S. beef prices and other suppliers, such as Brazil. It's a gap that didn't exist as recently as two years ago, Borror notes.
However, all is not doom and gloom for U.S. beef exports, as the overall level is historically high, if not a record.
It was heartening to the industry that international reaction was muted to April's discovery of a fourth U.S. BSE case. Only Indonesia and Saudi Arabia closed the door to U.S. beef, and Indonesia wasn't buying any American beef anyway.
Another bright spot is Russia, which is relaxing its meat import restrictions as it enters the World Trade Organization this month. Russia, a traditional market for U.S. beef livers and other lower-value cuts, is expanding its imports of higher-quality beef.
Under WTO, Russia has raised its quota for U.S. beef to 60,000 tons, from 41,700 tons. But since U.S. Choice and Prime beef does not compete with Russia's domestic meat, these higher-quality U.S. cuts are exempt from the quota.
The higher quota will help Russia accommodate athletes, fans and Olympic staff who will attend the Winter Games in southern Russia in February 2014.