Cow/Calf Corner: Beef Trade Continues to Boost Cattle Markets

The latest trade data (for January) shows that the strong beef exports from 2010 have carried over into 2011.   January beef exports totaled 190.553 million pounds, up24 percent from January 2010, and the highest January export level since 2003.  January beef exports increased to most major markets including Canada (up 20.4 %); Japan (up 61.6 %); South Korea (up 66.7 %); Hong Kong (up 128.2 %).  Beef exports in January dropped to Taiwan (down 14.7 %) as a result of the on-going dispute over ractopamine; and also to Vietnam (down 16.2 %).  Among the leading export markets, Mexico continues to be the weakest market with beef exports down 8.4 percent compared to January of 2010.  Mexico continues to struggle with general economic weakness.  Data from the Mexican Secretary of Economy shows that average slaughter cattle prices in central Mexico averaged 12 percent lower than U.S. fed cattle prices in February, while wholesale beef price averaged 10.4 percent lower than U.S. Select boxed beef prices.

Beef imports, on the other hand, continue to decrease.  January beef imports were down 20.1 percent from year earlier levels.  Total beef imports in 2010 were down 12.5 percent year over year.  Beef imports were down in January from the two of the three largest sources, Canada (down 21.5 %); and Australia (down 46.3 %), though imports from New Zealand were up 7.8 percent.  These three countries accounted for 80 percent of U.S. beef imports in January.  Other significant beef import sources include: Mexico, Nicaragua, Uruguay, Argentina and Costa Rica.  Additionally, January cattle imports were up20 compared to a year ago.  Cattle imports from Canada were down 12.3 percent, as a result of decreased cattle inventories and the relative attractiveness of cattle feeding in Canada.  Cattle imports from Mexico were up 66.6 percent in January compared to last year.  It is no surprise that record high U.S. feeder cattle price sis pulling additional cattle out of Mexico.  However, Mexican cattle inventories will not sustain this rate of exports for many months.  Moreover, large cattle exports increases the likelihood that Mexico will begin to import more beef to meet domestic market demands in the coming months.

There are several factors that contribute to both the growth in exports as well as the decrease in U.S. beef imports.  The continued weakness of the U.S. dollar is certainly an important factor in making U.S. beef more exportable and the U.S. market less attractive for imports.  Add to that decreased exports from Australia, limited cattle numbers in Canada and Mexico and the rapid growth in Asian markets and the result is more U.S. beef exports and reduced beef imports.  Both trends are expected to continue to in 2011.

Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

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This entry was posted in Markets.

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