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World Beef Trade Overview
Total Beef Trade Forecast at Record Level for 2003; U.S. Export Growth to
Slow from Previous Year
World Trade: Total beef exports for major exporting
countries are forecast at 6.6 million tons in 2003, an increase of 4 percent
over the 2002 estimate. As global demand increases and disease concerns ease,
beef exports are forecast higher for most major exporters, many of which will be
record setting. Australia remains the top world exporter of beef as exports are
expected to reach a record 1.425 million tons. Brazil, with record exports
forecast for 2003, remains in third place behind Australia and the United
States. Argentina and Uruguay continue moving towards exporting more
fresh/chilled beef, which accounts for much of the increased world competition.
Canadian exports are forecast to rise modestly in 2003. Japan is forecast to
account for about 40 percent of the total world increase in imports as it
continues to recover from BSE, in spite of the pending beef safeguard that could
be triggered as early as July 2003. However, Japan’s Diet decides in March
2003 whether to alter its tariff code before the end of the fiscal year to
impose the beef safeguard system. U.S. beef exports are expected to increase to
a record 1.163 million tons. Korea is expected to import record volumes of beef
in 2003, while U.S. beef imports remain flat around the record level of 1.481
million tons.
Key Exporters:
·
United States: Beef exports for 2003 are forecast up at
1.163 million tons. U.S. beef
production is forecast to fall 3.5 percent to nearly 12 million tons in 2003
after rising almost 4 percent in 2002 due to increased slaughter and higher
slaughter weights resulting from another year of dry conditions. Assuming a
return to normal pasture conditions, higher cow and heifer retention for herd
rebuilding during 2003 will mean reduced slaughter of female animals. This will
in turn reduce domestic beef supplies and consumption, which is forecast to fall
272,000 tons to nearly 12.5 million tons in 2003.With less beef available, only
moderate growth will be seen in most major markets as export expansion will be
constrained as prices rise.
·
Australia: Total beef exports are forecast to grow to a
record 1.4 million tons in 2003. Australia’s beef production is forecast down
2 percent at 2.05 million tons. Drought conditions in 2002 reduced inventories
and better range conditions are expected to lead to herd rebuilding in 2003.
Australia appears to have filled the U.S. beef import quota in 2002 and, in
spite of the reduction in production, is likely to fill it again in 2003. With
more beef moving to export in 2003, Australian beef prices are likely to
continue their downward trend and pressure competitors in export markets such as
Korea and Japan.
·
Brazil: Continuing a decade of expanding beef production,
Brazil’s beef output is expected to reach a record 7.4 million tons in 2003.
This strong growth in the beef sector will lead to record beef exports, forecast
at 970,000 tons in 2003. Exporting only 306,000 tons in 1998, Brazil has doubled
the number of countries it exports to in recent years. Acceptance of its
regional FMD free status by many countries in 2002 allowed Brazil to moderately
expand its presence in several markets. Brazil’s exports of thermo-processed
beef to the United States rose sharply. Approximately three-quarters of
Brazil’s exports now consist of frozen and fresh/chilled beef. Brazilian
exports have benefited from a number of currency devaluations, low production
costs and recent investment to expand production capacity.
·
Canada: Canada’s exports in 2003 are expected to grow to
615,000 tons, up slightly from 2002. Canadian cattle herds reached 13.7 million
head on January 1, 2002, but fell 3 percent by January 1, 2003 after severe
drought combined with high feed prices caused producers to liquidate herds. In
2003 beef production is forecast to decline 3 percent in response to lower
inventories and relatively tight feed supplies. Canada will continue to export
primarily higher-value, fresh/chilled beef cuts to the United States and Japan.
·
European Union: Beef exports for 2003 are forecast at
530,000 tons, up from the 2002 estimate, but still constrained by concerns about
BSE. EU exports are expected to remain limited to its Russian and Eastern
European neighbors. Many of the EU’s trading partners in the Middle East have
maintained restrictions concerning BSE, but a relaxation of import controls in
the Middle East markets could result in a small increase in exports in 2003.
Key Importers:
·
United States: Beef imports for 2003 are forecast slightly
higher at a record 1.5 million tons. Canada is the most important U.S. supplier
of high-quality, fresh/chilled beef, while Australia is the number one supplier
of processing frozen beef. Due to
outbreaks of FMD in Uruguay and Argentina in 2001, the United States stopped
imports of fresh/chilled and frozen beef from these two countries. Uruguay could
regain access to the U.S. market in late 2003. Uruguay fresh/chilled and frozen
beef imports are subject to an annual 20,000 ton TRQ.
·
Japan: With demand expected to recover as concerns about
the safety of beef consumption diminish, beef imports for 2003 are forecast at
850,000 tons, still below pre-BSE levels. As a result of stronger second quarter
imports, Japan is expected to trigger a safeguard on beef imports sometime in
the summer of 2003. If Japan enacts the safeguard, beef import tariffs will rise
from 38.5 percent to 50 percent. These will remain in effect for at least the
remainder of Japan’s fiscal year 2003, which ends on March 31, 2004. A
safeguard action could slow import growth by raising prices of imported beef and
shift some imports into the first quarter of 2003 in anticipation of the
safeguard announcement.
·
Russia: Beef imports for 2003 are forecast at 800,000 tons,
up 70,000 tons from 2002. Imports largely consist of low-grade, frozen beef for
further processing into sausage. On April 1, 2003, in an effort to support
domestic beef prices to encourage more production, a tariff rate quota (TRQ) set
at 420,000 tons will become effective for frozen beef. This TRQ is expected to
have limited impact on total meat imports however, due to the exclusion from the
TRQ of the Commonwealth of Independent States (CIS), which supply 25 percent of
Russian imports of frozen beef. Due to the manner in which the TRQ was calculated including
CIS countries’ exports, but yet excluding them from its application, enough
room will remain in the TRQ for exporters to send as much or more frozen beef
than they sent in 2002. The cattle herd in Russia is forecast to continue its
decline, with cattle inventories in 2003 only half the level of a decade
earlier.
·
European Union: Beef imports for 2003 are forecast at a
record 520,000 tons, up 30,000 tons from 2002. Argentina, Brazil and Uruguay are
the top exporters to the EU and the greatest beneficiaries of expanding EU
demand. Consumption in almost all EU countries has returned to pre-BSE levels.
U.S. exports to the EU continue to be limited because of the hormone ban. The
cattle herd in the EU is forecast to decline as some farmsteads elect to
permanently leave the beef industry in response to declining government
financial support. With the gap between total exports and imports falling to
only 10,000 tons in 2003, the EU is moving much closer to becoming a net beef
importer.
·
Mexico: In 2003 beef imports are forecast at 500,000 tons.
Mexico’s cattle herd continues to decline further to 20.1 million head for
2003, 33 percent below a decade earlier. Continued dry conditions and financial
burdens are resulting in a continued liquidation; however, with rising
disposable incomes and reduced production, Mexico is increasingly looking at
imports to meet consumer demand. Aided by NAFTA-induced tariff elimination, the
United States currently supplies 84 percent of Mexico’s fresh/chilled beef
imports and 84 percent of offal imports.
· Korea: Beef imports for 2003 are forecast at a record 445,000 tons, a modest expansion from 2002 imports. Korea’s cattle herd showed no change between 2002 and 2003, remaining at 1.9 million head. Due to the market being liberalized and uncertainty regarding Korea’s economic situation in 2003, no large increases in beef imports or consumption are anticipated this year. With high domestic beef prices and a strong Korean won, consumers will seek cheaper imported beef. Korean imports of fresh/chilled beef jumped in 2002 in response to the elimination of the last of its barriers to trade and retail sales of imported beef in late 2001.
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