Exports Performing Well Despite Russian Embargo and Less Beef to Canada13 December 2013
US - Despite complications, like the Russian trade block and a tapering of Canadian imports, beef trade has performed 'relatively well', according to two markets experts.
Weekly beef exports have been tracking higher in the last four weeks, driven by higher exports to Mexico and a number of Asian destinations, write market commentators Steve Meyer and Len Steiner.
Exports of fresh/frozen beef for the week ending December were 14,143 MT, 1 per cent higher than the previous year.
Shipments in the last four weeks have totaled 53,328 MT, up about 6 per cent from the previous four weeks but still about 3 per cent lower than the comparable period a year ago. Beef exports have performed relatively well in the last few weeks despite some significant weak points compared to last year.
For one, exports to Russia are non-existent while last year US shipments of fresh/ frozen beef to Russia in Q4 averaged about 3200 MT a month. Even more problematic recently has been the drop in exports to Canada, one of the top markets for US beef.
In the last four reported weeks , US shipped about 5,933 MT of fresh/frozen beef to Canada, 44 per cent less than a year ago. The monthly export data showed that October shipments to Canada were down about 33 per cent y/y and based on the weekly numbers, we think that November and December exports to the Canadian market will post even bigger declines.
Exports to Canada in the last quarter of 2012 were particularly high due to closure of an important processing plant (XL Beef). This meant more US beef had to be shipped north to fill immediate needs. More broadly, however, it is important to recognize the importance of the Canadian market to for the US beef industry.
In 2003, US exports of fresh/frozen beef and veal to Canada were about 47,452 MT. By 2012, shipments had increased to 130,707 MT. A shift in the exchange rate, more integrated cattle and beef industry and lower slaughter processing costs in the US have contributed to Canada buying more beef from the US.
The implementation of revised COOL (Country of Origin Labelling) threatens to disrupt this very important market. Beef exports to Asia, particularly Hong Kong, remain strong. In the last four weeks, US beef exports to Hong Kong were 12,447 MT, up 166 per cent from a year ago.
Exports to Japan were 11,103 MT, 46 per cent higher than a year ago. While earlier in the year much of the focus was on Japan, at this point US packers are shipping just as much beef, if not more on certain weeks, to Hong Kong. Exports to Korea have improved in recent weeks but they still remain 24 per cent below year ago levels. Korea recently finalized the Free Trade Agreement with Australia and its current 40 per cent tariff on beef imports will be phased out over the next 15 years.
The US also has an FTA agreement with Korea but exports to that market have struggled this year, in part because Japan and Hong Kong have been able to outbid Korean buyers for items that they normally buy in the US. Overall, we think the latest weekly beef exports numbers are positive. As we noted yesterday, exports remain a wild card for next year as beef supplies continue to contract.
TheCattleSite News Desk