Changes In Beef Trade
DR. ANDREW P. GRIFFITH
KNOXVILLE, TENN.
The United States beef cattle industry depends heavily on international beef market trade as beef and veal exports are currently adding approximately $360 to each finished animal, and imports are integral to secure lean product. Trade agreements or lack there of have a tremendous impact on trade and are normally the topic of discussion. However, there are other factors such as drought and consumer taste and preferences that shift beef demand. It is prudent to evaluate shifts in beef imports and exports and discuss why those shifts have occurred to gain a better understanding of the factors influencing local markets.
In the first quarter of 2021, total beef and veal exports on a carcass weight basis were 27.2 million pounds (3.5 percent) greater than the first quarter of 2020 and totaled 796.5 million pounds. However, this increase in exports came with significant changes in destinations.
Japan has been the top beef export destination for many years and continue to be at 200.9 million pounds in the first quarter of 2021.
However, beef and veal exports to Japan in the first quarter of 2021 were 26.9 million pounds (-11.8 percent) lower than the same period in 2020. The traditional third and fourth top destinations for beef exports, Mexico and Canada, also realized reductions in beef and veal exports. Beef and veal exports to Mexico in the first quarter of 2021 totaled 86.9 million pounds, which was a decline of 14.0 million pounds (-13.9 percent) compared to the same time period in 2020.
Similarly, beef and veal exports to Canada declined 7.6 million pounds (-10.4 percent) to 65.5 million pounds in the first quarter. Similar type declines were witnessed in Taiwan, Hong Kong, and Vietnam.
The countries in which beef exports increased were China and South Korea. South Korea is the number two export destination for beef and veal. In the first quarter of 2021, exports of beef and veal to South Korea totaled 193.1 million pounds, which is a 22.1 million pound increase (+13.9 percent) compared to the first quarter of 2020. There is small possibility that South Korea overtakes Japan as the number one destination for beef and veal exports. The other country to note is China. China was essentially a nonplayer as it relates to beef and veal exports until April 2020. Since April 2020, China has become a major destination for U.S. beef and veal. Through the first three months of 2021, China is the number three destination for U.S. beef and veal exports, which total 89.9 million pounds compared to 5.7 million in the same time period in 2020. The opening of the China market has resulted in increased exports in the aggregate, but it has also reduced exports to certain countries as it pushes beef prices higher.
One would be remiss to not discuss beef and veal imports while discussing exports. In the first quarter of 2021, beef and veal imports totaled 696.1 million pounds, which is a decline of 77.6 million pounds (-10.0%) compared to the first quarter of 2020. This decline is largely due to a 51.7 percent (87.3 million pounds) reduction in imports from Australia. The Australian beef industry has been hampered by several years of drought, and they are now attempting to rebuild cattle inventory, which has reduced slaughter. This same situation has supported more U.S. beef exports. Despite the large reduction of imports from Australia, Brazilian beef and veal imports have doubled in the first quarter of 2021 compared to the same time period in 2020 and totaled 50.5 million pounds. Imports from Mexico in the first quarter declined nearly 10.9 million pounds year-over-year while imports from Canada have increased 10.8 million pounds.
It is clear times are changing, and they are likely to change again.
Some of the changes are welcome by beef cattle producers while others will not be. The reduction of beef imports is supporting the slaughter cow market while the increase in exports is supporting higher beef prices but not cattle prices necessarily. There may be even more changes with the change in the Presidential administration. This is a fluid situation that bears a person’s attention. ∆
DR. ANDREW P. GRIFFITH: Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee