Beef imports from Australia are projected to be 64 percent more than last year, in part due to the depleted U.S. cow herd. | Adobe Stock ImageImage20240927213635
The U.S. is expected to import at least 50 percent more beef from Australia, Brazil and Uruguay in 2024 than in 2023.
According to USDA data, Australia is on track to ship 64 percent more than last year, Brazil is on track to ship 50 percent more and it’s expected that Uruguayan beef imports will increase by 57 percent, said Altin Kalo, an analyst for the Chicago Mercantile Exchange group.
The product is “lean grind” or “grinding beef” which arrives frozen, he said.
It has been 10 years since the U.S. has imported this much beef from Australia.
Iowa cattle feeder and R-CALF USA director Eric Nelson believes an increase in beef imports affects U.S. cattle prices.
“They import ‘grinding beef,’ and that goes tit for tat against the value of cull cows here in the U.S.,” he said.
“For people whose income solely comes from cattle, they get paid twice a year – once for their calves and once for their cull cows. The price of those cull cows is important.”
Kalo said that burger chains are often the destination for imported beef and that the larger volumes of imported beef is due to several factors.
Nelson said there is another industry indicator of increased imports of grinding meat: higher demand for extra fat on slaughter cattle. The current situation is eerily similar to 2015. “Right now the carcass weights are really high. That’s what happened in 2015 when we also had high imports.”
“Two years ago we were docked for heavy carcasses but now they aren’t complaining about them because they need that extra fat to mix in with the imported beef.”
The current cattle cycle here and ‘down under’ helps to explain the increased imports, said Kalo. “The place we are in the cattle cycle in the U.S. is almost the opposite of Australia. We are depleting our cowherd, we have fewer cows producing less lean grinding beef. Because of the weather, they have been rebuilding and their herd is at its cyclical peak. So Australia has meat and the U.S. is short.”
“We (in the U.S.) are paying the highest prices for lean beef that we ever have, that makes Australian beef more attractive. That is how markets function, the product goes to where the demand is,” he said.
Because of a Free Trade Agreement between the U.S. and Australia, there are no tariffs on Australian beef, said Kalo.
He also explained that China’s beef demand affects the world market.
“Over the last decade, China became the biggest importer of beef. For a while they were on a significant growth trajectory. Because they were a new entrant, they were out-muscling everyone else. Now that demand from China has slowed down. It’s not growing, it’s staying stable right now,” he said.
“In the past, a country like Australia (at the peak of its production cycle) would have sent more to China, but now China is directing that beef to the U.S.”
Kalo also pointed that 10 years ago, fresh beef from Brazil was prohibited from entering the U.S., but that is no longer the case.
“You don’t just have Australia, you have Brazil, Uruguay and Argentina. You have a lot more of that product entering the U.S. market,” he said.
There is no Free Trade Agreement with those countries, so they pay tariffs when they meet their quotas. Brazil met its quota in March of this year, but importing companies continue to be willing to pay the 26.4 percent tariff for Brazilian beef.
“Generally that tariff is big enough to discourage imports but in this situation where we’ve seen prices for lean beef go up significantly, and on top of that a strong U.S. dollar, that’s enough to offset the discouraging affects of tariffs,” he said.
Kalo said that if companies didn’t import beef, their costs would increase, which would be passed on to the consumer. Kalo believes that consumers may choose not to pay more for hamburger and the burger chains might switch to alternate sources of protein.
But Nelson said that the American consumer has so far been willing to pay for beef, and he believes MCOOL would help the U.S. producer by identifying the origin of beef.
Nelson said that the imports come with a big cost to America. “It’s death by a thousand cuts. They tell us they have to keep importing, but once we lose a vibrant industry like the cattle industry – and the sheep industry – the corporations will take over. Does anyone believe the American consumer will be better off at that point? Corporations have no conscience.”
Canadian beef and cattle imports have remained relatively stable, said Kalo, but feeder cattle imports from Mexico have increased significantly this year.
“U.S. feedlot placements have been higher than expected in recent months and this is in part due to an increase in imports of feeder cattle from Mexico. Since early April, imports of Mexican feeder cattle are up 160k head (+32%) vs. a year ago. The official USDA forecast for Mexican cattle exports to the U.S. in 2024 is 1.450 million head, 155k head higher than a year ago. A more recent update from the USDA post in Mexico (not official) actually puts the forecast at 1.4 million, suggesting a notable slowdown in imports this fall. Recent weekly seems to support that view,” said a Sept. 26, 2024, CME report.
Although USDA forecasts smaller numbers of feeder cattle coming in from Mexico next year, Kalo and other CME analysts believe the weather, cattle cycle, exchange rate and other factors actually indicate that Mexican feeder cattle could continue to cross the border at similar or increasing rates next year.
“There are a lot of factors at play but we would argue that the biggest drivers, cow herd and calf crop, suggest Mexico will remain a significant supplier in the next two years, especially where we are in the U.S. cattle cycle,” said the CME report.
Nelson said that Mexican feeder cattle don’t directly compete with feeder calves from the North because the calves from Mexico probably couldn’t survive in the northern states, but the Mexican calves still affect prices.
“Numbers are tight here in the U.S. so the packers and processors are trying to cheapen up the price they have to pay for slaughter cattle here. Every container full of imported beef helps with that, at the expense of the very rancher we’re trying to stabilize so we don’t have to rely on foreign imports to feed our people.”
All trade is wonderful – for somebody, Nelson said.
“Virtually every country we export to uses tariffs to protect their domestic industries, but we don’t reciprocate. We need to deal with trade from a position of strength, but instead we are a dumping ground for other countries. That is the opposite from a position of strength.”
“Most trade benefits the people involved in the trade, the brokers, merchants, handlers, it’s highly profitable for them,” he said.
“Cattle prices have been pretty good this year, but we still are going to have to maintain pretty strong calf values, strong kill cow values in order to keep a domestic cattle herd here and to keep us producing our own food.”
Author :
Publish date : 2024-09-27 12:15:00
Copyright for syndicated content belongs to the linked Source.
—-
Author : theamericannews
Publish date : 2024-09-28 21:53:08
Copyright for syndicated content belongs to the linked Source.