Livestock and Poultry: World Markets and Trade - October 2009

Economic recovery in 2010 will help stimulate improved demand for meat and poultry, according to the USDA Foreign Agricultural Service.
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USDA Foreign Agricultural Service

Beef and pork exports are forecast up one and three per cent, respectively. Whereas improved demand for beef is expected worldwide, the boost in pork will generally be concentrated in North America. Brazil, the only key beef producer with excess supplies, is expected as the principal beneficiary of increased demand. However, both Brazil and the United States will be able to take advantage of the rise in pork.

Broiler and turkey meat exports are forecast two and four per cent higher, respectively. Brazil will be the primary supplier as it focuses on growth to non-traditional markets. The United States faces a decline in broiler shipments on weak demand in major markets but modest growth is expected for turkey.


World beef and veal production down slightly to 56.4 million tons

Beef production in 2010 is forecast to continue its recent decline, albeit at a slower rate of less than one per cent. Production increases in Brazil (four per cent) and India (five per cent) will not offset less production in Argentina (13 per cent), China (four per cent) and the United States (two per cent).

Argentina: Production is forecast to tumble 13 per cent to 2.8 million tons on tighter cattle inventories. Argentina is expected to begin 2010 with a herd of 50.2 million head, 10 per cent lower than just two years ago. Drought, persisting in most of the country since mid-2007, has been the primary driver of herd reduction generating lower calf crops on diminished pregnancy rates and depressed returns have forced producers to market more cattle than usual. Thus liquidation in 2008 and 2009 will come to fruition in 2010 as fewer weaned calves, a smaller herd and a reduction of cows for slaughter will limit supplies. Export restrictions, domestic policies capping beef prices, and reduced profit margins will also stifle investment and production.

China: Continuing contraction of the cattle herd is forecast to negatively impact beef production. which will fall to just over 5.5 million tons – comparable to the levels of 2003/2004. The herd,estimated at 104.9 million head at the beginning of 2010, will have contracted for two years. Backyard producers, which account for the majority of holdings, have been discouraged by a marketing system disadvantageous to small producers. Despite high cattle prices, production costs have risen at a faster rate, squeezing profit margins. Uncertainty in the sector, which stifles production, has also been fostered by continued outbreaks of foot and mouth disease (FMD).

United States: Production is forecast to decline nearly two per cent to 11.6 million tons on tighter supplies as the cattle herd has been contracting since 2007.

Brazil: Production is forecast to rise four per cent to 9.3 million tons. Unlike other major producers, the herd continues to expand and is forecast to reach 185.2 million head by 2010. Increased availability of slaughter cattle will not only enable packers to meet strong demand for exports, which accounts for the bulk of the increase, but also satisfy solid domestic demand.

India: With the world’s largest bovine herd, beef and buffalo meat production is forecast to rise five per cent, primarily driven by strong domestic demand. Buffalo meat is cost competitive compared toother meat products and is widely accepted among Indian consumers. Firm demand for exports will also bolster production.

Exports: Recovery in 2010 elusive

World trade is forecast to rise a mere one per cent as global demand fails to fully rebound and major suppliers struggle to generate adequate supplies. Australian and New Zealand exports are forecast to fall three and two per cent respectively as they will be limited by production declines. Brazil is forecast to rise a stunning 20 per cent – a trend that will not apply to its South American counterparts.

Brazil: Although the cattle sector is facing challenges due to industry restructuring and two years of reduced exports, the outlook for 2010 is extremely positive with exports rising to nearly 1.9 million tons. While still below the historical high of 2007, the increase will reinforce Brazil’s position as the world’s largest beef exporter and restore global market share. It is expected that global economic recovery could generate opportunities in the Middle East, recovery of shipments to the EU will continue, limited competing South American supplies will spur shipments to Russia, and the Columbia-Venezuela dispute will open avenues into Venezuela.

India: Exports are forecast to rise four per cent to a historic 700,000 tons. Global demand for Indian buffalo meat is gradually growing due to its cost competitiveness, leanness, and perceived organic nature. However sales will remain limited to non-traditional, albeit growth, markets.

United States: Exports are forecast to rise seven per cent to 837,000 tons – a level still below that of 2008 and pre-BSE. Economic recovery in Canada and Mexico, the principal markets, are expected to drive the growth as well as greater Chinese demand.

Argentina: Plummeting production is forecast to reduce exportable supplies in 2010. The principal products and destinations will be high-value chilled cuts to the EU (Hilton Quota), thermo-processed products to the EU, chilled cuts to Chile and frozen cuts to Russia, Venezuela and Israel. Exports of thermo-processed product to the United States are expected to remain stable or slightly diminish.

Columbia: Exports are forecast to decline nearly 90 per cent from 180,000 tons in 2009 to a mere 20,000 tons in 2010. Trade is dependent on the Venezuelan market and the current trade disruption will result in increased production remaining in-country for domestic consumption.

Imports: Lacklustre as demand is slow to rebound from recession

Global economic recovery will somewhat renew demand in 2010 and there will be few countries with noteworthy forecasts.

Russia: In the absence of a multilateral agreement on 2010 TRQs, the forecast is based on 2009 TRQ levels and allocations. As production declines persist and the economy rebounds, imports are expected to continue to fulfill demand. Imports are forecast to rise 11 per cent to 780,000 remaining well below the 2008 peak.

United States: The world’s largest beef importer is forecast to increase by four per cent to 1.3 million tons bolstered by reduced US production, a strong dollar, and robust demand for lean trimmings.

EU: Imports are forecast upward by four per cent to 490,000 tons. Although lower production is expected to boost imports, it will be moderately constrained by stagnant demand as other proteins, particularly poultry, continue to make consumption gains.

Venezuela: Imports will plunge 60 per cent to 100,000 tons despite growing demand as imports will be limited by its disruption with Columbia. With other South American producers failing to raise substantial supplies, Brazil is likely to be the key supplier.


Global Pork production forecast up 2 per cent to 101.9 million tons

China is the driving force behind global production growth in 2010. Excluding China, production is fractionally lower, as contraction in the United States, Canada, and the EU slightly offsets gains in Brazil, Russia, and the Ukraine.

China: Production is again forecast higher, up four per cent to 50.3 million tons. Expansion is fueled by government sow subsidies and improved animal disease control notably for Porcine Reproductive and Respiratory Syndrome (PRRS).

United States: Higher feed prices and relatively weak hog prices over the past two years results in a forecast of slightly lower production (two per cent) as producers reduce herds.

Canada: Production is forecast to fall to the lowest level nine years, plunging seven per cent to 1.7 million tons. A shrinking swine herd, as the industry faces a third consecutive year of low returns, will translate to lower pork production.

Brazil: Production is forecast up four per cent, bolstered by strong domestic demand, with pork prices competitive with beef, and growth in the export market.

Russia: Moderate growth is expected as government subsidies continue to stimulate investments in the pork industry. Producers are supported by more efficient operations, better swine genetics, and expected lower feed prices. Production is forecast 4 per cent higher at nearly 2.3 million tons.

Exports: Up slightly, resuming longer term growth trend

Exports, primarily from the United States and Brazil, are forecast up 3 per cent to 5.6 million tons as exporters are optimistic about growth in the world economy in 2010 and expect demand from major markets to strengthen.

United States: Moderate gains are expected as US shipments to major markets are expected to strengthen with improved economic conditions, a weaker dollar, and competitive prices. Reliance on export markets rises slightly as 20 per cent of US production is exported.

Brazil: Growth is expected to new markets, while demand remains from traditional markets.

EU-27 and Canada: Exports are forecast down 4 and 3 per cent, respectively, as lower production reduces exportable supplies.

Imports: Slight recovery due to North American growth

North American imports are forecast to increase more rapidly than most other major importing regions as global imports rise two per cent to 5.4 million tons.

Canada: Imports are forecast to jump 18 per cent due to a stronger Canadian dollar and firm demand for high quality fresh cuts at a time when domestic pork production continues to decline.

Mexico: Imports forecast up three per cent as demand remains firm.

United States: Imports forecast up five per cent on tight supplies expected due to lower domestic production and greater exports.

South Korea: A stronger economy and Korean won are forecast to bolster imports up, seven per cent.

Ukraine: A currency devaluation and continued economic weakness are expected adversely affect imports, forecast 17 per cent lower.

China: Imports, which account for a negligible amount of consumption, are expected to fall 20 per cent to 120,000 tons, as abundant local supplies dampen import demand.


Broiler Meat

Production forecast to rebound in 2010

Following recession-induced stagnant production, 2010 is forecast up three per cent at 73.7 million tons.

Growth is forecast to be largely driven by new historic production levels in Brazil and China (four and three per cent higher, respectively). Brazil’s rise is spurred by strong export and domestic demand. China’s increase is in response to strong domestic demand due to economic expansion. Contributing to global growth will be the world’s leading producer, the United States, which is forecast two per cent higher at 16.2 million tons. Virtually all other major producers, particularly Argentina, India and Russia are forecast to expand production.

Exports forecast slightly higher amid growing supplies

Exports are forecast two per cent higher at 8.3 million tons. Plentiful supplies partnered with increasing consumption as the macroeconomic outlook improves will facilitate the positive environment for international trade.

Brazil’s expanding exports are forecast six per cent higher to a record of over 3.3 million tons. Import demand is expected from a variety of markets in the Middle East and Asia as well as efforts to open new markets. Brazil’s continued, long-term focus on developing non-traditional markets will buoy expansion.

US exports are forecast five per cent lower at nearly 2.9 million tons. Increased production in Russia and China to meet consumption needs as well as lingering non-tariff barriers to trade will weaken demand for US product.

Imports forecast to rise largely on developing and non-traditional markets

Global economic recovery is expected to stimulate consumption and raise import demand. While Russia, the EU and Japan remain the largest markets for broiler meat imports, their share of global trade is forecast to continue to stagnate or erode in 2010.

In the absence of a multilateral agreement on 2010 TRQs, the Russian forecast is based on 2009 TRQ levels and allocations. While the 2010 outlook depends greatly on future policy decisions for not only the TRQ but also the chlorine ban and imposition of non-tariff barriers, imports are forecast four per cent lower at 855,000 tons. The reduction is expected as the Russian poultry industry, due to government financial support, will grow faster than consumption.

Larger imports are forecast to be led by non-traditional developing markets in the Middle East and Sub-Saharan Africa which are slowly accounting for a greater portion of world trade. Demand in these markets is spurred by population growth, rising incomes, and budding meat consumption. Poultry performs particularly well in these markets as it is a lower cost animal protein (compared to beef and lamb), versatile, and does not have any religious taboo attached to consumption.

Turkey Meat

Production to rise slightly in 2010

Following a decline in 2009, production is forecast to rebound two per cent to nearly 5.2 million tons on gains by Brazil and the United States which more than offset a decline in the EU. The United States is expected to rise two per cent to 2.6 million tons. Brazil’s production is forecast to reach 480,000 tons on higher demand from both the domestic and foreign market. The world’s largest producer, the EU is expected to be stagnant.

Trade rises four per cent as world economy recovers

Exports of turkey meat are forecast to rise nearly four per cent to 551,000 tons. Both the United States and Brazil are expected to benefit from renewed demand. Mexican imports are forecast to rise by nearly 12 per cent on demand for cuts for processing as the economy rebounds from recession.

Further Reading

- You can view the full report by clicking here.

January 2010

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