Beef Export Forecast

Published: Feb 15, 2008

Introduction
Following the Feb. 12 release of the U.S. Department of Agriculture’s beef and pork trade outlook forecasts for 2008, the U.S. Meat Export Federation (USMEF) will examine key statistics and trends in four primary areas over the coming week:

Beef Exports
Pork Exports
Beef Imports
Pork Imports

We begin this series with an analysis of the global beef export market with a view of the U.S. position in the marketplace and the changing status of our primary competitors.

Highlights

Largest increase in exports – The biggest percentage increase in beef exports over the coming decade is expected to come from the United States with 2017 exports totaling 1.2 million metric tons (2.64 billion pounds): an 88 percent increase equal to an additional 573,000 metric tons (1.26 billion pounds) comparing 2017 exports to 2007. Brazil is forecast to increase exports 27 percent, which equals an additional 651,000 metric tons (1.43 billion pounds) over the next 10 years with exports totaling 3.05 million metric tons (more than 6.7 billion pounds) in 2017. According to Erin Daley, USMEF manager of research and analysis, the bulk of the increase in U.S. exports is expected to come from the anticipated reopening of the beef market in South Korea and expanded access to the market in Japan.

USMEF’s forecast for U.S. beef exports remains 20 percent higher than USDA estimates for 2008, and 35 to 55 percent higher over the 10-year outlook period, based on the anticipated impact of the changes in the status of the South Korean and Japanese beef markets during the first half of 2008. USMEF anticipates a quick recovery of market share in Asia due to strong beef demand and high beef prices in South Korea and Japan. Although USDA’s export projections are not published by market, it appears that USDA projections assume a more gradual rebuilding of U.S. beef exports to these two key markets, which were the No. 1 and No. 3 beef export markets for the United States prior to the BSE outbreak in December 2003. For comparison, USMEF anticipates a recovery of 2003 export volume by 2010 while USDA does not anticipate exports will approach the 2003 level until 2017.

Largest decrease in exports – USDA’s forecasts for Australia’s and New Zealand’s beef exports are reduced for each year of the outlook period, with the largest reduction of 221,000 metric tons (487 million pounds) in 2009 attributed partially to weather-related challenges and heifer retention for rebuilding herds. Australia remains the second-largest beef exporter in the world behind Brazil, but it is not expected to recover 2007 export levels over the coming 10 years. Exports from Australia are projected to drop 5 percent to 6 percent in 2008 and 2009, and then remain relatively flat through 2017. According to Daley, these forecasts reflect a slow recovery of U.S. and Canadian exports to Japan and South Korea. The decline in Australian beef exports to Asia should be partially offset by an increase in grass-fed beef exports to the United States. However, USDA projects a 5 percent increase in U.S. beef imports (from all suppliers) in 2008 followed by a minimal 1 percent annual increase in subsequent years.
Brazil – As the largest beef exporter in the world, Brazil merits its own category. Russia remains Brazil’s top export market, and Brazil enjoyed a 50 percent increase in exports to Russia in 2007. Brazil’s exports during 2007 already exceeded USDA’s projections for exports in the year 2016, so those projections have been revised to show a 10 percent increase in 2008 and 1 percent to 2 percent increases per year over the remainder of the outlook period (through 2017). According to Daley, factors that could affect Brazil’s export performance include the continued strengthening of the Brazilian currency, the real, which combined with strong domestic and global demand drove Brazilian prices to parity with Australian beef prices at the end of 2007. Other factors would be any change in Brazil’s foot and mouth disease (FMD) status and challenges to their traceability program as seen in the current EU ban on Brazilian beef shipments.

According to Daley, Brazil should continue to fill the growing demand for beef in Russia, the Middle East and the EU, and to a lesser extent in Hong Kong and the Philippines. In general, grain-fed beef from the United States does not compete with Brazilian grass-fed beef in these markets, and Brazil is not expected to gain access to key U.S. export markets (Japan, South Korea and Mexico) in the coming decade.

The USDA also forecasts a 4.9 pound (retail weight) per capita decline in U.S. beef consumption from 2007 to 2017, with a 1.3 pound per capita decline during 2008. These estimates reflect tight beef supplies going forward, and also indicate that a supply constraint was used in USDA’s export forecast.

Next: Pork Exports

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The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry and is funded by USDA, exporting companies, and the beef, pork, corn, sorghum and soybean checkoff programs.