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Cattle and Veal World Markets and Trade

26 April 2009

USDA Foreign Agricultural Service

For the first time in over a decade, global imports of pork, beef, and broiler meats are all forecast to decline in a single year, reports the USDA Foreign Agricultural Service.

Deterioration in the global economic situation, restrictive trade policies, the stronger U.S. dollar and changing market conditions, are among the reasons for falling demand in some major importing countries.

The drop in global pork imports can mostly be attributed to a combination of cost prohibitive Russian out-of-quota tariffs, Ukraine’s worsening economic conditions and currency devaluation, and greater Chinese pork production. These three countries account for over 20 per cent of world demand, but nearly 80 per cent of the year-to-year drop.

Weaker beef demand by many principal importers such as Russia, Mexico and South Korea will more than offset growth in the United States and the EU, two of the world’s largest importers. Global imports of broiler meat are down mainly because of Russia, which accounts for 15 per cent of world imports in 2008. Russia’s restrictive import quotas and cost prohibitive out-of-quota tariffs constrain trade, while production is expanding with newer facilities as the government is committed to becoming a net exporter in the near future.


Year-to-Year Changes for 2005 to 2009

Beef and Veal: 2009 Revised Forecast Overview

Note: Significant revisions in the historical and forecast Indian cattle and beef PSDs are included in the April 2009 release. These revisions, particularly for 2008 and 2009 estimates and forecasts of beef production and trade, reflect new data and methodology more than a change in the actual forecast.

Global Production 2 per cent Lower on Reduced Cattle Supplies, Higher Input Costs and Lower Returns

Cattle supplies in the United States and Argentina are forecast lower, generating tighter beef supplies. U.S. cattle inventory is at its lowest since 1959. Increased Brazilian slaughter in recent years has reduced supplies and spurred high prices, constraining domestic and foreign consumption growth. The sector also remains plagued by bankruptcies and plant closings by key packers. Argentina faces a shortage of feed reserves, the reduction of thousands of hectares of pastures (turned into cropland or affected by drought), and a smaller corn crop. China is adversely affected by rising input costs, and low returns. Alternatively, expansion in both EU and Canadian production is based on a decline in feed grain prices and higher slaughter.

Consumption Shrinks for Most Countries, Strong Declines in Russia and Argentina

In a period of global recession, consumers would be expected to shift to lower-cost animal proteins (such as pork and poultry) and non-animal proteins (such as fish and vegetable proteins), fewer meals at restaurants and smaller portions. In the case of South Korea, for example, beef is traditionally a side dish eaten at restaurants rather than at home. Initial survey data shows that when faced with diminished incomes, consumers will reduce eating out thus reducing beef consumption. Mexican and South Korean consumption will be dampened as they face higher import prices due in part to weaker currencies vis-à-vis the U.S. dollar.

Global Imports Ease 3 per cent as Economic Downturn Hits Beef

Recession driven declines in consumption weakened Mexican and South Korean import demand. As Russian consumption contracts, imports are forecast down. Alternatively, tight U.S. supplies combined with a stronger dollar will bolster U.S. imports. EU imports are revised upward as more Brazilian farms will be eligible to ship beef to the EU.

World Exports Slump, Especially Brazil

Almost no major beef exporter will avoid the global slump in import demand. Despite a more optimistic view of sales to the EU, a reduction in Russian and Middle East imports will result in the lowest level of Brazilian exports since 2004.

Further Reading

- You can view the full report by clicking here.

April 2009

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