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World Beef Trade Overview
Following the release of USDA
official statistics on October 21, 2004, a framework agreement to resume trade
was reached between the United States and Japan on October 23, 2004.
While shipments could resume by early 2005, the estimates do not reflect
the impact of the framework agreement. Necessary
regulatory procedures have not been completed in either country and the level of
expected trade is dependent on the timing and outcome of this work.
USDA will update the estimates as more information becomes available.
The following discussion reflects the situation prior to the framework
agreement.
In 2005, total beef exports from leading suppliers are
forecast to rebound, increasing to nearly 6.6 million tons following 2004
projected declines because of import bans due to bovine spongiform
encephalopathy (BSE). Export growth
will come from South America as export markets open in response to disease
eradication efforts and improved price competitiveness due to favorable exchange
rates. Exports to the European
Union (EU), a traditional market for South American beef, will grow as EU
producers limit production in order to adjust to Common Agriculture Policy (CAP)
reform. In addition, smaller
markets will have to import from non-traditional suppliers or import less as
Australia and New Zealand shift a greater proportion of their exports to Japan
and Korea. U.S. exports are
forecast to increase by 70,000 tons in 2005, reflecting a continuing recovery of
exports to those countries that have reopened their markets to U.S. beef.
However as restrictions and bans on U.S. beef in Japan and Korea
continue, U.S. exports will be less than one-fourth of 2003 levels and the
United States will have dropped from the third to the ninth largest exporter of
beef in the world.
Total beef exports for leading suppliers are projected at 6.2 million tons for 2004, revised upward 5 percent from the March 2004 estimate, but lower than 2003 due to BSE. For major suppliers in South America, the 2004 estimate is revised upward to reflect increases following the relaxation of some import bans due to Foot and Mouth Disease (FMD). The 2004 estimate for U.S. beef exports is revised upward to reflect the reopening of Mexico and Canada as well as secondary markets.
Imports in 2005 are forecast to be 4.8 million tons, or 4 percent higher than 2004. Aggregate consumption in major markets will remain relatively unchanged from 2004 to 2005 due to higher prices and tighter supplies. Production will decrease marginally in the European Union due to CAP reform and in Australia, and New Zealand as producers rebuild cattle herds following high slaughter rates due to periods of drought and high beef prices. In the United States, production is forecast to remain relatively unchanged due to low cattle inventories and imports are forecast to increase 2 percent. The United States will remain the largest beef importer in 2004 and 2005. Total beef imports for major markets are forecast at 4.6 million tons for 2004, revised upward 3 percent from the March 2004 estimate. Japan is importing more from Australia and New Zealand to make up for reduced imports due to bans on North American beef. The European Union is forecast to import more from South America.
·
United States: U.S
beef exports will be limited in 2005 due to bans currently in place by major
importing countries. Mexico has
become the largest importer of U.S. beef and the trend is expected to continue,
as import bans by other countries are assumed to remain in 2005.
U.S. beef exports are forecast to be 272,000 tons in 2005, representing a
35-percent increase over 2004, but remaining significantly below historical
levels. In 2004, exports to
reopened markets are not expected to reach pre-BSE levels, in particular to
Canada, where cattle inventory and beef supplies are at record-high levels.
U.S. production will be stable as producers take advantage of improved
weather conditions and better grain prices to shift towards herd rebuilding. The United States is the primary high-quality beef supplier
to the world, but as long as bans on U.S. beef continue, Australia will have an
opportunity to improve its competitive position in supplying beef to major
markets such as Japan and Korea.
·
Brazil: With a
forecast 1.6 million tons in beef exports in 2005, Brazil is expected to remain
the world’s largest beef supplier despite the recent discovery of FMD in the
pre-Amazon region of mid-northern Brazil. The
majority of beef production for export originates outside of the pre-Amazon in
southern, southeastern, and central-western Brazil, which benefits from better
access to infrastructure, abundant feed supplies, and inexpensive land
unencumbered by environmental regulations.
Brazilian beef exports will continue increasing due to expansion and
improvement of productivity, favorable exchange rates, and aggressive marketing
efforts. In 2005, beef production
is expected to increase by 5 percent due to improved economic growth generating
increased domestic demand, continued expansion of beef exports, and a record
beef cattle herd. The 2004 beef
export forecast was revised upward to nearly 1.5 million tons to reflect
expected increases in exports to the European Union, Egypt, and Russia because
of rising prices in those markets and favorable exchange rates.
·
Australia: Australian
beef exports are forecast to remain at 1.3 million tons in 2005. A marginal decrease in beef production is anticipated as
Australia balances herd rebuilding with current high beef prices.
Pasture conditions have improved this year following what was the worst
drought in a century. However, prices are relatively high in Japan, Korea, and the
United States, which are pulling Australia’s exports away from smaller
markets. As of August 2004,
Australia’s year-to-date beef exports to Japan were up 42 percent and beef
exports to Korea were up 32 percent. Producers
are expected to continue taking advantage of higher prices due to lower
competition in other markets, which will lead to increased exports to these
markets and reduced domestic consumption in Australia.
·
India: India’s
beef and carabeef (buffalo meat) exports are forecast at 625,000 tons in 2005,
representing a 16-percent increase over 2004, due to increased production,
improved quality, and greater demand in export markets.
India’s marketing efforts are increasing exports in both traditional
and new markets and beef production is increasing to meet this demand through
investments in meat processing capacity. Meat
quality is improving due to better animal health management, greater efficiency
in animal production, and investments in feedlots.
·
New Zealand: New
Zealand beef exports are forecast at 605,000 tons in 2005, relatively unchanged
over 2004. Assuming a return to
normal pasture conditions, higher cow and heifer retention for herd rebuilding
in 2005 is expected to reduce slaughter of female animals and lower beef
production nearly 1 percent in 2005. The
2004 beef export estimate is revised upward from the March 2004 estimate to
reflect increased exports to Korea and Japan as exporters take advantage of bans
on U.S. beef. This is evidenced by
exports to Japan increasing 92 percent and Korea increasing 99 percent January
through August 2004 compared to the same period in 2003.
·
Argentina: Argentina’s
2005 beef exports are anticipated to achieve a 25-year high due to strong world
demand, the opening of new markets due to improved sanitary status, and
favorable exchange rates. Cattle
liquidation resulting from a severe drought in 2003 led to increased beef
production in 2004, which boosted available supplies.
Beef production capacity has increased in the last few years and will
likely continue given recent investments by meat packers. As the Argentine government continues to aggressively
negotiate the opening of markets now that the FMD situation has improved
following large-scale vaccinations, there will be expanded opportunities for
Argentine beef exports. The 2004
beef export estimate is revised upward from the March 2004 estimate because of
expected increases in exports to the United States, the European Union, Russia,
and Venezuela.
·
Canada: In
2005, beef production will increase whereas consumption will not; hence exports
are expected to rise 6 percent to 570,000 tons, compared to 2004, but 7 percent
less than pre-BSE exports in 2002. The
United States will remain Canada’s most important beef export market, but the
Canadian government is aggressively pursuing efforts to reopen other markets to
reduce dependency on the United States. Canadian
producers face significant challenges due to bans on cattle exports to the
United States. Cattle inventories
continue to rise, and are expected to exceed 16 million head at the end of 2005,
while slaughter capacity remains limited. Canadian
packers are operating near full capacity and expected increases in slaughter
capacity for 2005 cannot process all of the cattle that would normally be
exported to the United States. Canadian
producers are proposing ways to deal with the surplus cattle, with the support
of the Canadian government, such as increasing slaughter capacity and displacing
imports with domestic production. The
2004 Canadian beef export estimate was revised downward 4 percent from the March
2004 estimate because beef exports have been slower than expected.
· United States: The 2004 beef import estimate is revised upward 5 percent from the March 2004 estimate. In 2005, U.S. beef imports are forecast to reach nearly 1.7 million tons, though consumption will remain stable, increasing by less than 1 percent in 2005. Import growth partly reflects reduced cow slaughter. Lean trimmings from grass-fed, older cows are mixed with fat trimmings from grain-fed beef for hamburger meat. Supplies of domestic processing beef are expected to be lower as cow inventories have been declining. In addition, the ban on imported Canadian cattle has contributed to a smaller number of cows and cow beef available to U.S. meat packers for processing. Because of lower U.S. production of lean trimmings and stable demand, lean trimmings must be imported from Australia, New Zealand, and Uruguay. U.S. imports from Uruguay have increased due to the higher prices in the U.S. market and resumption of FMD-free status.
·
Russia: Russian
beef imports will remain steady in 2005. Imports
from Russia’s largest supplier, Ukraine, are forecast to decline due to lower
production in Ukraine. The decline
in imports from Ukraine is forecast to be offset by increases in imports under
the quota system as implementation of the tariff rate quota improves. Russian beef production is expected to decrease 4 percent,
limiting supply and increasing prices. Recently,
the livestock sector experienced a further reduction in the number of large
farms partially due to high feed costs and poor feeding conditions, which is
expected to lower calf production in 2004.
Due to the higher prices and tighter supplies, consumption is forecast to
decrease nearly 3 percent.
·
European Union: In
2005, beef imports in the 25-member European Union are forecast to be 535,000
tons, up 2 percent over last year. The
EU beef trade deficit is forecast at 165,000 tons net imports in 2005 and is
expected to continue rising as the result of declining production and a shift in
policy to decouple support payments from production.
Farmers in the new member states are expected to face challenges to meet
new EU environmental, food quality, and animal welfare standards because these
countries will not have fully transitioned to the CAP system.
The European Union did not ban U.S. beef due to BSE, but hormone-related
restrictions continue to limit the amount of U.S. beef that can be exported to
the EU.
·
Japan: In
2005, beef imports are forecast at 611,000 tons, 1 percent higher than expected
imports in 2004, but 25 percent lower than in 2003.
Japanese beef imports will be constrained as long as bans on U.S. beef
remain. Prior to the ban, U.S. beef
accounted for one-third of beef consumption in Japan.
Domestic production and imports from Australia and New Zealand have
increased over previous levels. However,
these increases are not enough to meet Japanese demand, resulting in a tight
supply situation. Australian
grass-fed beef is not fully substitutable with U.S. grain-fed beef and
Australia’s grain-fed beef production cannot reach levels comparable to the
United States due to grain supply constraints and limited feedlot capacity.
The 2004 beef import estimate was revised upward because imports from
Australia and New Zealand have been sharply up in the first half of the year.
·
Mexico: In
2005, Mexico is expected to import 320,000 tons of beef, an increase of 19
percent over 2004. Beef production
is forecast to decline in 2005 constrained by fewer cattle available for
slaughter, as Mexico has experienced drought in the last two years in the north,
which encouraged the sale of cattle and reduced cattle inventory.
Production also is affected by record numbers of cattle shipped to the
United States for feeding purposes. Exports
of feeder cattle from northern Mexico to the United States are high due to
extremely high feeder cattle prices in the United States.
Mexico’s drought situation has improved, but fodder reserves and feed
prices have not returned to normal levels.
Assuming pasture conditions improve, cattle available for slaughter is
expected to decline in 2005 as producers retain cattle for herd rebuilding.
Lower production in 2005 will improve export opportunities for selected
U.S. beef products popular in Mexico. The
2004 import estimate was increased from the March 2004 estimate to reflect
Mexico’s reopening its borders to U.S. and Canadian beef.
· Korea: In 2005, Korean beef imports are anticipated to increase 38 percent over 2004 to 275,000 tons, but remain significantly below import levels prior to the import ban on U.S. beef. In 2004, beef consumption dropped due to BSE concerns; however, demand appears to still be greater than available supply. Consumer demand, higher costs to produce beef domestically, and tighter world supply of beef have led to higher beef prices in Korea. Korean importers must out-bid Japanese importers for available beef supplies. Facing higher prices, Korean consumers have restrained their beef consumption and looked for alternative substitutes, such as pork, or fish. There are signs that consumer confidence in beef is improving and consumption is expected to increase 11 percent in 2005.
Beef Exports Rise 6.5 percent in 2005; U.S. Market Share Forecast at 4 percent
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