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CME: Total Beef Exports in January Higher Than Previous Year

11 March 2014

US - Red meat exports were higher in January despite a significant increase in US prices compared to the previous year, write Steve Meyer and Len Steiner.

Keep in mind, however, that much of the supply shipped in January was contracted in the previous month so we will likely see the full impact of the higher beef and pork prices in the February and March data.

Below are some of the highlights from the January export update:

Total exports of fresh/frozen and cooked beef in January were 67,828 MT, 6.9 per cent higher than the previous year. Exports to Japan, a key market for US beef at this point, continue to be strong, up 48 per cent compared to the limited volume of 2013 and now accounting for 20 per cent of all US beef exports.

Shipments to Hong Kong have been particularly supportive of US beef exports in the last 12 months and in January total shipments were 12,376 MT, up 85 per cent from a year ago. However, based on weekly export data shipments to this market cooled off in February and early March.

It remains to be seen how exports to Hong Kong perform in the coming months. Seasonally exports should be higher in the spring and summer. Mexico is now the fourth largest market for US beef and, at 11,400 MT, US beef exports were up 24 per cent compared to a year ago.

Mexico demand for US beef rebounded in 2013 after collapsing in 2012. Some of this was due to a significant liquidation of the beef cow herd due to drought pressures. Beef supplies in Mexico will likely be limited in 2014 as slaughter numbers decline and producers try to retain what is left of their herds.

Also, the calf crop in Mexico has been cut by some 25 per cent in the last decade and this means that Mexican processors now rely on US beef supplies more than ever.

Exports to South Korea were 9,223 MT, 10 per cent lower than a year ago. Exports of beef variety meats in January were 30,000 MT, 29 per cent higher than a year ago and a boost to cattle drop credit values.

Bottom line: Red meat exports were relatively strong in January but volumes will likely decline in the coming months as tight supplies and high prices take their toll.

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