26 March 2010

5 minute read

Canada

Beef: The Canadian beef cattle herd dropped to 11 million head, down 1.4 per cent and the lowest in 15 years as of January 2010. Current indications are that a moderate expansion may begin in 2011 or 2012.

Total cattle exports fell 33 per cent in 2009 compared to the year before. The forecast for 2010 expects cattle exports to increase slightly to reflect tighter US supply and some stability in the Canadian dollar.

Beef exports fell three per cent to 280,294 metric tons due to a drop in shipments to the US.

Total beef imports in 2009 reached 247,032 metric tons, up seven per cent. This reflects the consumers need to purchase cheaper cuts of meat from New Zealand, Australia and Uruguay, as well as the increased buying power of the Canadian dollar. Beef imports are expected to increase to 290,000 metric tons in 2010.

Consumption declined throughout 2009 and a modest recovery is expected by late 2010.

You can view the full report here.

China

Beef: China's beef herd is expected to fall three per cent to 46.5 million head in 2010. Calf production is also expected to fall four per cent to 41 million head. China’s beef production is estimated to continue falling to 5.5 MMT in 2010, down five per cent from the year before, as comparatively low farm returns dampen enthusiasm for raising beef cattle.

These low returns and anticipated increasing feed and production costs will do little to encourage producers to expand production.

The Chinese government did introduce new subsidies in 2009 to boost local beef supplies and improve herd quality, however these efforts have been considered too modest and China's herd continues to decline.

Lower production will fuel higher domestic beef prices, discouraging consumption. On top of this prices of other meats, such as pork and chicken are continuing to fall.

Beef imports are continuing to rise steadily and forecast to increase by 30 per cent in 2010. Traders estimate these imports – primarily from Brazil and the United States – topped 100,000 metric tons in 2009. Meanwhile, reduced supplies and high prices will drive further declines in Chinese beef exports to 28,000 metric tons, down from 38,000 metric tons in 2009.

Dairy: It is reported that the industry is slowly starting to recover following on from the melamine crisis in 2008. Breeding cow imports nearly doubled in 2009 to 36,000 head, dominated by Australia and New Zealand markets. More than one million dairy cows were eliminated from the herd following this scandal.

You can view the full report here.

Mexico

Beef: Cattle production in 2010 is expected to remain unchanged. However it is likely that cattle slaughter may increase as a result of the Mexican government supporting a programme to increase slaughter within Federal Inspected Facilities.

It is predicted that beef consumption in 2010 will increase, supported by strong exports to Asian markets. The price for beef was higher than pork and chicken throughout 2009, which should have limited consumption to middle and upper-income consumers. However an increase in consumption is supported by increased demands of upper-middle and upper-income consumers, tourism, and the switch from pork to beef as a result of the H1N1 outbreaks.

Exports of beef are expected to grow in 2010, reaching 55,000 metric tons, with growth tied to the US market. Sales to Asian markets particularly Japan and Korea will be important in 2010.

Beef imports in 2010 are likely to fall due to a slower consumption recovery. Additionally there are BSE restrictions on US imports of bone-in-beef and small intestines.

There is also a 25 per cent import tariff to non-NAFTA imports in the government's bid to limit imports from third countries, thus favouring imports from the US if the BSE restrictions are mitigated.

You can view the full report here.

Korea

Beef: The number of cattle in Korea is increasing year on year. Production has grown for six consecutive years, reaching 267,000 metric tons in 2009

Slaughter in 2009 was lower than expected at 815,000 head since farmers held-off marketing their animals because they expected prices to continue to climb.

This meant that the average slaughter weight increased as cattle were fed for longer.

There is strong demand for domestic beef which pushed prices up throughout 2009. It is expected that prices will continue to stay high as demand remains strong.

Farmers are expected to respond to demand through an increase in calf production.

Overall cattle production is expected to level off, as farmers become cautious of a price drop due to over-supply. The cattle inventory is expected to peak in 2011 and then start contracting.

The Korean government has established a working level committee to revise the existing beef grading system, which is overly focused on maximising marbling. The committee’s goal is to develop a more balanced grading system that provides incentives to farmers to slaughter their animals earlier at around 27 months, instead of the traditional 30+ months.

In the meantime though it is expected that producers will hold onto animals in order to increase profits from maximum marbling at slaughter.

Approximately half of domestic demand in 2009 was imported. In December the US Meat Export Federation kicked off a trust campaign to rebuild confidence in US beef. With this in mind it is expected that imports of US beef will reach 110,000 metric tons in 2010.

You can view the full report here.