CME: Will Beef Imports Increase as Projected?11 November 2008
US - CME's Daily Livestock Report for 10th November 2008.
The latest USDA forecasts of US meat production and trade were released on yesterday morning (November 10th) and they contained some interesting points concerning the outlook for 2009. The charts below were constructed to illustrate two facets of the most recent update.
First, beef and pork output is expected to decline from 2008 levels but the rate of decline is not as large as some may think and the volume expected to come to market is still expected to be notably higher than in 2004 or 2005. Despite the relatively large output levels (a result in part of the production capacity currently in place), USDA expects per capita consumption to decline further in the case of beef and, in the case of pork be only marginally higher than in 2008. More specifically, USDA expects US commercial beef production in 2009 to be 26.752 billion pounds, only about 50 million pounds or 0.2% lower than a year ago but around 2 billion pounds (+8%) larger than in 2005.
Despite the big growth in output in the past three years, US per capita beef consumption is forecast to continue to decline and is currently pegged at 62.4 pounds per person (retail wt. basis), 1% lower than the projected numbers for 2008 but 4.7% higher than in 2005. How is it that per capita consumption declines in the face of such big increases in output? Trade flows account for much of the change in beef product availability in the US domestic market and that remains the big question mark in the most recent USDA update. Will US beef imports increase just 150 million pounds (+6.2%) as currently projected? We suspect that number may be too low, especially given the surge in the US dollar and falling demand from countries such as Russia. Keep in mind that US beef imports in 2008 declined by about 600 million pounds due to minimal shipments from Uruguay and notably lower imports from Australia. The former will likely be back in force in the US market in 2009 and Australia now has very strong incentives to ship more beef to the US, especially following a 35% devaluation of its currency. As for exports, they are still expected to increase by 79 million pounds (+4.3%).
In the case of pork, much of the per capita consumption number also hinges on the expectation that while exports will decline from the all time record levels of 2008, they will still be at historically very high levels. The latest USDA forecast pegs US pork exports for 2009 at 4.5 billion pounds, 568 million pounds (-11.2%) lower than expected 2008 levels but still about 1.3 billion pounds larger than just two years ago. Pork output in 2009 is currently forecast at 23.094 billion pounds, 38 million pounds or 1.6% lower than a year ago but 2.4 billion pounds (+11.5%) higher than in 2005.
|TheCattleSite News Desk||Read more DAHS News here|