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CME: Beef Exports Forecast to Increase 4.7% in 2018

10 January 2018

US - November beef and veal exports were 260.7 million pounds (carcass wt. basis), 2.7 per cent higher than a year ago and just three million pounds shy of the record volume shipped in August, according to Steiner Consulting Division, Inc.

Based on weekly export data, we think December shipments will be lower than in November and also down about 4 per cent compared to a year ago. Still, this has been a record year for US beef exports and we expect the total volume for the year will establish a new all time record at 2.85 billion pounds, 11.5 per cent higher than a year ago.

The gains in exports are even more impressive when we look at the dollar sales. According to USDA, the value of beef and veal exports in November was $594 million, 10 per cent higher than a year ago. In 2017 the value of fresh, frozen and cooked US beef exports was $5.456 billion.

This year US beef exports are on track to hit $6.4 billion, a 17 per cent year-on-year gain and clear evidence of excellent demand for US product. By far the biggest gains in US beef exports in 2017 were in Asian markets, especially Japan and South Korea.

Exports to Japan through November were up 166 million pounds (+27.6 per cent), exports to South Korea were up 25 million pounds (+6 per cent) and exports to Hong Kong were up 29 million pounds (+11 per cent).

The export gains reflect robust economic growth there and the resulting impact on beef demand. Also, increased beef availability in the US has allowed Japanese and South Korean end users to expand their beef offerings, confident that there is enough supply in the US to support their efforts.

Price is always important, and US prices have become more competitive in recent years. But just as important is availability. For many Japanese buyers the decline in US cattle numbers and beef production meant that they no longer could rely on a consistent flow of product at reasonable price points.

As cattle numbers have recovered, we expect beef shipments to Asian markets to ramp up further. US exporters have also benefited from the fact that Australia, our main competitor in Japan and South Korea, is in a herd rebuilding mode.

Bottom line: US beef availability is expected to increase further in 2018 and combined with robust global growth and limited supplies in Australia this should continue to bolster US beef exports. Latest USDA forecast is for beef exports in 2018 to increase 4.7 per cent, a conservative forecast in our view.

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