 |
|
|
|||||
|
|
December 29, 2005 Market Advisor: U.S. Beef to Japan Is Great News
The announcement in mid-December that Japan would again accept U.S. beef was great news for cattle producers. The timing prior to the holiday season was especially good news. Two years ago, the ill-timed news that a case of bovine spongiform encephalopathy (BSE) was discovered in the U.S. certainly caused a stressful holiday season for many of us in the cattle business. Expectations have been high for more than a year that business would resume, so the announcement erases the uncertainty that has affected the market for many months. Prior to BSE surfacing in the U.S., Japan was the leading export market for beef and beef variety meats. In 2003, the U.S. exported about 900 million pounds of beef and another 170 million pounds of beef variety meats for a total value at just less than $1.5 billion. 2003 beef exports had declined from peak levels of around 1.1 billion pounds in 1998, 1999 and 2000. The decline was due mainly to the discovery of BSE in Japan’s domestic cattle herd, which caused a decline in consumer demand for all beef, including imported products. The other major markets in 2003 were South Korea, Mexico and Canada. Beef exports to Mexico and Canada have resumed, but at levels lower than before. At this writing, Korea still will not import U.S. beef. The actual amount of beef going to Japan will be slow at first. Regaining the entire market likely will be a slow process, possibly taking several years. Beef must be from cattle that are age-verified to be 20 months of age or less when slaughtered. The USDA released a statement that said about 94 percent of U.S. ruminant and ruminant products can qualify for export to Japan. However, trade sources have said that there may be only 10 percent to 15 percent of cattle that have sufficient records and documentation to qualify for export. The spring calving season will start for some producers very soon. They are encouraged to consider an age-verifying program for calves when they are born. There is no guarantee that premiums will exist on a consistent basis next fall, but being prepared may pay dividends. There are other reasons, besides age verification, why trade with Japan may be slower than some people in the beef industry would like. U.S. beef production is at a cyclical low after declines in cattle numbers from 1996 through 2004. The buildup phase of the cycle has started, so fewer heifers are being fed and slaughtered. Japanese consumers have switched to other meat sources, including U.S. pork and some Australian beef, in the last two years. Some Japanese consumers have indicated a reluctance to return quickly to consuming U.S. beef. U.S. trade groups will promote beef actively in Japan, but only time will tell how consumers will respond. The other good news about the opening of Japan to U.S. beef is that it may pave the way for resumption of trade with other countries. In comments made by U.S. Agriculture Secretary Mike Johanns concerning the Japanese market, he indicated that the U.S. now could export beef and beef products to 67 countries, but 52 countries that received imports prior to 2004 remain closed. Several Asian markets in particular are important for U.S. beef and beef products. As previously mentioned, South Korea historically was the second leading importer of beef and negotiations are still taking place for that market. In addition, Taiwan, Hong Kong, China and Singapore remain closed to U.S. beef. It is hoped that these countries will adopt world standards and accept beef that is 30 months of age or less. As beef production in the U.S. increases cyclically in the next several years, it will be even more important to have a strong export market. So, even though the Japanese market is open, the cattle market likely will remain volatile as news about volumes of beef actually going to Japan and other important countries reopening their market to U.S. beef and beef products becomes available. ### Source:
Tim Petry, (701) 231-7469, tpetry@ndsuext.nodak.edu |
Market Advisor: |
|
North Dakota State University |
