SUN VALLEY • High prices are slowing U.S. beef exports, but producers aren’t seeing the impact.
A challenging economic environment is making it difficult to match last year’s export volume, but U.S. products continue to command an excellent price in international markets and provide substantial returns to producers. “The world wants your beef,” said Dan Halstrom, senior vice president of global marketing and communications for the U.S. Meat Export Federation. He spoke at the Idaho Cattle Association’s annual meeting in Sun Valley.
According to the latest data from the U.S. Department of Agriculture, total shipments of beef were down 16 percent compared to the year before. September marked the ninth consecutive month that U.S. beef exports posted a year-over-year decline. But even as volume has shrunk, high prices have meant export revenues are up about 2 percent compared to last year.
Export value averaged $213.63 per head of fed slaughter cattle in September, up 6 percent compared to the previous year. That’s a much needed bonus at a time when feed costs are high.
One of the most promising export stories comes from Japan where both volume and value are increasing, Halstrom said. Although exports to Japan were up just 2 percent in September, the value of those exports surged by nearly 25 percent to $86.6 million. That’s consistent with the rest of the 2012 calendar year in which export volume has been steady but value is up 23 percent. Japan now ranks second in export value to Canada.
Halstrom is hopeful that Japan will soon lift its 20-month cattle age restriction on imports of U.S. beef. The age restriction was put in place in 2005 following an outbreak of mad cow disease, otherwise known as bovine spongiform encephalopathy or BSE.
Late last month, Japan’s Food Safety Commission recommended easing restrictions on beef imports to allow animals 30 months and younger to be imported. The recommendation has raised few consumer concerns in Japan and the change could be implemented early in 2013.
Japanese buyers remain interested in forequarter cuts and short plates as well as beef tongues, but are also showing growing interest in middle meats and very high- end cuts. Demand for prime and higher-level cuts is also promising.
Beef producers hope that interest will help the U.S. capture more of the overall Japanese market share, which Australia makes up 60 percent of.
Mexico remains the leading volume market for U.S. beef, Halstrom said. But exports there have struggled in 2012, reflecting a weak peso and sluggish economy. While beef sales are down, U.S. pork exports are up as Mexican consumers substitute cheaper pork products for beef.
The beef industry remains concerned that domestic consumers will also switch to other meat in the face of strong prices.
Tim DelCurto spoke at a winter cow feeding seminar late last month. As head of the Eastern Oregon Research Center, he sold heifers for $1.25 a pound this fall.
Those heifers made $100 over breakeven costs even though they were fed a ration that cost $340 a ton.
“We’ve got issues here we need to be concerned with,” DelCurto said. “The feeder and packer segment has been showing record losses and has been for nearly a year.
“Packers are unwilling to raise prices right now, but they will and the consumers will bear the brunt of that.”