CME: Decline in US Beef Exports03 December 2012
US - US beef exports have declined in recent weeks, which seasonally is the case at this time of year. The seasonal decline has contributed to the weaker undertone in the beef complex, write Steve Meyer and Len Steiner.
One instance is the value of the short plate primal, an item that benefits directly from export demand in Asia but which also reflects the lower valuation for fatty beef trim (it is about 65CL lean) in the domestic market. Without strong export demand, the value of short plates will struggle since 50CL trim is currently running about 32 per cent below year ago levels. As we noted yesterday, the short plate primal is currently down about 10 per cent in value compared to a year ago. This is a good time to review the progress of US beef exports and the implications this has for export demand in the coming year as beef prices in the US are expected to escalate.
While in the case of pork we have to wait two months to
get the official trade data, with beef exports we have a more timely
report issued by FAS/USDA. The weekly export survey shows that
beef exports for the week ending 22 November were 13779 MT,
about 8 per cent higher than the same week the year prior but down from
the 17,000 MT that was shipped in September and early October.
Exports to Japan, a market that remains key to growth in US beef
exports going forward, seasonally declines at this time of year. The
pace of weekly shipments to Japan is currently approaching the
lows for the year.
While back in June and July US packers were shipping as much as 3500 MT a week to Japan, the latest data shows weekly exports at around 1800 MT per week. The slowdown in exports to Japan has been particularly notable since 1 October. In the last six reported weeks, beef exports to Japan have averaged a little over 2100 MT per week, 16 per cent below year ago levels. During the same time frame, shipments to Korea, another key export market, have averaged around 2200 MT per week, 4 per cent below last year’s levels. The slowdown in exports to these markets is important as packers tend to benefit significantly by shipping items that are valued much less in the domestic market.
Export demand for items such as chuck rolls and short plates directly impacts the overall valuation of the chuck and plate primal, which together account for 37 per cent of the overall carcass. The slowdown in exports reflects two things, in our view. First, the US had less beef to sell than a year ago, with higher prices rationing export demand. Steer and heifer slaughter between 1 October and 22 November averaged about 2 per cent below year ago levels.
For some weeks in October slaughter was running about 6 per cent below last year. Second, it appears that the overall higher beef prices have negatively impacted consumers in markets such as Japan and S. Korea. Japan has been recently importing less beef not just from the US but also Australia, their largest imported beef supplier. Australian shipments to Japan in October were down 17 per cent and we expect them to purchased about 20 per cent less in November as well.
Finally, there is the issue of data reliability. For much of this year, the weekly export data appears to have overstated overall volume compared to the official data that is published by the US Census (data which also includes cooked beef). Since the beginning of the year, the monthly export statistics have averaged about 12 per cent below what the weekly report indicates.
TheCattleSite News Desk