For first time in 40 years, U.S. a net exporter of beef

By CAROL RYAN DUMAS

Capital Press

Several factors have decreased U.S. beef imports in 2011, but at the top of the list is the weaker U.S. dollar.

The weak dollar makes it more expensive for U.S. end users to purchase beef overseas and reduces the attractiveness of the U.S. market to importers, said Altin Kalo, economist with Steiner Consulting, Manchester, N.J.

Kalo, a regular contributor to the CME Daily Livestock Report, said 2011 will be the first time in more than 40 years that the U.S. will be a net beef exporter.

Robust U.S. beef exports and increased global demand are contributing to the shift in the trade balance, but it is primarily driven by the weak U.S. currency, he said.

"The U.S. market used to take it for granted that everyone wanted to ship here," he said.

Imports to the U.S. from January through October this year are down significantly, 13 percent, compared with the same period last year, according to USDA Economic Research Service.

Updated statistics from the U.S. Census Bureau show imports are down 12.2 percent through mid-December, Kalo said.

Economic growth in Brazil, the world's largest beef producer, is fueling more demand domestically, so the country is exporting less beef than it did in the past. South America is also focused on domestic need, and Argentina's government mandate, in the form of export tariffs, is limiting exports in an attempt to control inflation, he said.

The world's largest buyers, Japan and Russia, are having to source their beef from New Zealand, Australia, Canada and Uruguay, regular suppliers to the U.S.

"The U.S. has to share the supply with other places," he said.

With the high price of beef, some countries are rebuilding their herds, which reduces available supply in the short term. Kalo doesn't expect global beef supplies to recover until 2013 or 2014, he said.

"Lower imports, smaller production domestically and larger exports have reduced the overall beef availability in the U.S. market, which is why beef and cattle prices are at record levels right now," Kalo said.

But demand in the U.S. has also been fairly weak, especially since the recession began. USDA is forecasting 2011 per capita beef disappearance (consumption and thrown-out scraps) at 54.1 pounds, a 6 percent year-over-year decline and 17 percent less than pre-recession levels.

The reduction in imports has contributed about one-third to the reduction in disappearance, while exports have accounted for about 60 percent of the reduction. The balance is accounted for by lower production and reduction in carry-over stocks, Kalo said.

In its Dec. 15 Livestock, Dairy and Poultry Outlook, USDA-ERS forecasted U.S. beef exports in 2011 at 2.78 billion pounds and imports at 2.05 billion pounds, down 11 percent from 2010. The agency is expecting only a slight increase, 2 percent, in imports in 2012 due to a continued tight global supply.

U.S. beef and veal imports

Carcass weight, 1,000 pounds

Country Jan.-Oct. 2010 Jan.-Oct 2011 % chng.

Canada 751,658 585,055 -22%

Australia 507,263 376,180 -26%

New Zealand 432,048 420,359 -3%

Mexico 86,839 128,997 49%

Nicaragua 81,750 104,359 28%

Brazil 60,271 29,557 -51%

Uruguay 45,823 42,480 -7%

Argentina 33,341 38,440 15%

Other 26,247 33,240 27%

Total 2,025,276 1,758,804 -13%

SOURCE: USDA-ERS

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