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Agricultural News


Dr. Derrell Peel Examines the Dynamics Between the Major Players on the World Beef Trade Scene

Mon, 23 Jan 2017 11:03:17 CST

Dr. Derrell Peel Examines the Dynamics Between the Major Players on the World Beef Trade Scene Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel examines the various situations among leading beef exporting nations that he believes will contribute to a dynamic international marketplace for some time to come.



"Global beef exports are expected to increase year over year in 2017 with growth in several major beef exporting countries supported by growing production in most cases. However, the situations vary among beef exporting countries and market conditions will keep international markets dynamic for the foreseeable future. Beef exports from the top four exporting countries (Brazil, India, Australia and the U.S.) are projected in 2017 to account for 73 percent of total exports from the top ten beef exporting countries.



"Brazil and India, with roughly equal beef export totals, are projected to lead the world in beef exports in 2017. Both countries are experiencing growing production and growing international market demand and access. Brazil, which has a dominant position in European and Middle Eastern markets is seeing increased access to China as well as the U.S. Late in 2016, the U.S. and Brazil announced an agreement that would allow Brazil to export fresh or frozen beef to the U.S. along with cooked product. Brazilian exports have also been boosted by the currency weakness of the Real. India has also seen growing production and international demand for Indian beef, much of which is carabeef (water buffalo). Recent announcements indicate that India has an agreement with China for direct access to the Chinese market. Previous Indian beef shipments to China were transshipped through other countries such as Vietnam.



"Australia has slipped to the number three beef exporting country as the extended herd liquidation through 2015 (which resulted in temporarily higher exports in 2014 and 2015) is now resulting in reduced beef production and exports. Low cattle inventories, combined with herd rebuilding on better forage conditions, will suppress beef production and exports in 2017 and beyond. Australia has enjoyed expanded beef market access in China and most recently began shipping live cattle to China as well.



"The U.S. will maintain its rank as the number four beef exporting country in 2017. Beef exports increased in 2016 (after dropping in 2015) as production increased and beef prices dropped from record levels. Improved beef exports are projected for 2017 despite the headwind of a continued strong dollar. However, considerable uncertainty surrounds potential changes in trade policy that may accompany the Trump administration. Renegotiating the North American Free Trade Agreement (NAFTA) exposes the beef industry to less favorable trade conditions while the apparent demise of the Trans-Pacific Partnership (TPP) will maintain restricted U.S. access or less favorable tariffs in some markets, most notably Japan. The U.S. does not currently have direct access to the rapidly growing Chinese beef market. Unofficial U.S. beef exports to China have occurred in recent years as transshipments through Hong Kong and Vietnam. In the fall of 2016, China announced a willingness to move forward with an agreement for the U.S. to export beef to China. However, no agreement is in place at this time and the current status of these discussions is unclear given the political changes in the U.S. and the confrontational posture of the Trump administration towards China.



"The next tier of beef exporting countries are significantly smaller in export volume compared to the top four beef exporting countries. These include, in descending order based on projected 2017 exports: New Zealand, Canada, Paraguay and Uruguay. Combined beef exports from these four countries are smaller than the total of either Brazil or India. Each of these countries is expected to maintain or expand beef exports in 2017. Mexico, with beef exports that have expanded sharply in recent years, ranks as the number ten beef exporting country just behind the European Union. Mexican beef exports are expected to continue growing in 2017 with significant expansion of Mexican feedlot and beef packing infrastructure in 2016. The majority of Mexican beef exports are imported by the U.S."






   

 

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