Beef markets continue to see positive trends in high exports, production
High beef prices show promise for cattle producers around the country, and forecasts that the industry is poised to expand continuing into 2014.
At the same time, research groups and meat industry groups look at protein output, prices and comparisons to other proteins in looking toward the future of the markets.
Protein output
For 2014, total meat and poultry output has been defined as “erratic” by CME Group.
“This level of apparent randomness has made it even more difficult to gauge the status of total muscle protein supplies,” they comment.
“Amid all of the concern over low feedlot inventories and pig death losses has also been the issue of weather, which has impacted hog deliveries on some days and caused broiler slaughter and production to fluctuate wildly,” CME Group continues.
Total meat and poultry production has fallen short of year-ago levels, they explain.
“Last week’s year-on-year shortfall of 5.8 percent was pretty much free of weather problems and is the largest since a weather-impacted sharp decline in the week of Jan. 10,” CME says, speaking about the week of March 10.
Beef output for the weeks of March 3 and March 10 fell 7.5 percent and 6.4 percent lower than on year ago levels, respectively, and year to date totals are 4.7 percent lower than 2013.
Beef prices
CME Groups notes that relative beef prices are quite expensive compared to other proteins on the market, even after pork cutout values increased as a result of PEDv outbreaks.
“After jumping sharply following the discovery of bovine spongiform encephalopathy in Canada in 2003, the Choice beef-pork spread fluctuated seasonally between $70 and $100 per hundredweight through 2012,” says CME Group. “It jumped above $100 last year’s as cattle numbers tightened, set a new record in January and has remained near $120 since then.”
They continue, “While pork is at $120 per hundredweight is pricey, beef is still no bargain.”
Compared to chicken, CME Group also says that spreads of more than $120 per hundredweight have been seen, marking record highs.
“Even though the composite broiler price has risen by over $15 per hundredweight since mid-February, the surge in beef values has swamped it,” they note.
Comparison
However, they further note that the pork-composite broiler spread remains in the “normal” range.
“We put ‘normal’ in quotations because it can easily be argued that there has been nothing normal about this range since 2007 with the spread roughly doubling from previous year,” CME Group comments.
Export markets
The U.S. Meat Export Federation (USMEF) comments that red meat exports have started positive for this year.
“U.S. beef, pork and lamb exports all opened the new year on a positive note, although market conditions suggest 2014 could be a challenging year for U.S. red meat exports, according to statistics released by USDA,” says USMEF.
Beef exports rose 13 percent in volume and 16 percent in value for January, with double digit growth in Mexico, Japan and Hong Kong markets.
“While price is just one of the many factors that affect red meat trade, higher U.S. pork and beef prices will create challenges for American red meat exports in the months ahead, particularly in markets where customers are more price sensitive,” USMEF says.
Performance
“With U.S. beef production is expected to drop five percent this year, and already running below last year’s levels, it will be challenging to maintain export levels,” says USMEF President and CEO Philip Seng.
Three key markets – Mexico, Japan and Hong Kong – have strong performance in 2014, thus far.
Mexico’s exports were valued at $93.6 million, up 27 percent, and Japan’s exports were up 28 percent to $92.9 million. Exports to Hong Kong were valued at $80 million, up 118 percent.
Growth of 23 percent, 53 percent and 83 percent in value was seen in Mexico, Japan and Hong Kong, respectively.
Triple-digit growth in Colombia, coupled with solid growth in the rest of Central and South America, her offset the drop of 26 percent in volume and 21 percent in value to Canada.
Declines were also seen in the value to the Middle East and in volume to South Korea.
“In addition, the reemerging Indonesian market was the eighth largest single-country destination by volume as exports continued the strong pace set back in October following improved market access conditions,” USMEF continues.
Export numbers
USMEF reports that January exports of 97,824 metric tons marks an increase of 13 percent.
“Export value rose 16 percent year-over-year to $514.5 million,” they report. “Exports accounted for 13 percent of total beef production, including muscle cuts and variety meat, and 10 percent for muscle cuts alone – increases of two and one percent, respectively.”
Export value from a year ago was up $14.79 to $219.73 for beef.
Export support
U.S. beef leaders have actively kept involved in the international marketplace, recently attending the second-largest food industry show in the world, Gulfood in Dubai.
“What we saw in both regions is the competitiveness of countries wanting to be in the market,” said Mark Jagels, USMEF’s chairman.
Dan Halstrom, USMEF’s senior vice president for global marketing and communication, complimented the Market Expo team on their engagement and eagerness to learn about the two diverse markets.
“The real value of these market expos is in helping American producers – representatives of our funding sources – see and better understand both the challenges and opportunities that the United States faces in the international market,” said Halstrom. “The better informed our members are, the better we can represent their interests.”
This article was compiled from releases from the U.S. Meat Export Federation and CME Group. Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.
