The COVID-19 pandemic has taken a bite out of U.S. beef exports due to foodservice shutdowns, weaker economies and supply chain disruptions. But the export picture in 2021 is looking brighter.
The global economy is expected to contract 4.4% this year and rebound 5.7% next year, and U.S. beef exports will benefit from limited global beef supplies, said Erin Borror, an economist with the U.S. Meat Export Federation.
U.S. beef exports January through September were down 8% year over year. But USMEF expects a strong rebound in 2021 with a 9% increase, she said during a podcast for USMEF’s strategic planning conference this week.
Headlining the drivers for global beef exports is the decrease in production in Australia. It’s forecast to be down 15% in 2020 with a corresponding 17% decrease in exports following two years of drought, she said.
That shortage out of Australia — the biggest competitor for the U.S. — is part of the expectation for strong U.S. beef exports in 2021, she said.
Australia’s carcass prices are the highest of all major beef exporters and have been higher than U.S. prices since June, she said
Another driver is Chinese demand. Global beef exports to China January through August were up 24% over the same period a year earlier, with China accounting for 31% of global exports, she said.
U.S. beef exports to China/Hong Kong were up 11% year over year January through September, according to USMEF data.
The Phase 1 trade agreement between the U.S and China significantly increased the eligible supply of U.S. cattle for the Chinese market, she said.
The agreement eliminated the 30-month age limit on cattle for beef exports to China.
The agreement came at a good time. USMEF teams in China say foodservice there is booming, trade shows are being held and more events are planned, she said.
“This also symbolizes the growth potential in this market as economic activity has basically normalized, and there’s also the pent-up demand on the foodservice side,” she said.
The growth in U.S. beef exports through August has mainly been to Japan, she said.
U.S. beef exports to Japan have seen a rebound in market share following the implementation of the U.S.-Japan agreement on Jan. 1. The agreement eliminated the tariff disadvantages, with the tariff on U.S. beef phasing down from 38.5% to 25.8% now and 9% over several years,” she said.
“There is one possible headwind in Japan where the new annual U.S. safeguard replaces the old quarterly chilled and frozen (beef) safeguard mechanisms,” she said.
That could trigger a return to the 38.5% tariff for 45 days, and it’s likely to happen in February, she said.
The safeguard is meant to protect Japan’s domestic producers and triggers when imports increase above a certain amount.
“Across the Asian markets, U.S. beef continues to dominate the grain-fed imports in Japan, (South) Korea, Hong Kong and Taiwan,” she said.
China has been the only exception, but momentum is gaining due to slowed imports from Australia, she said.
“U.S. beef is currently not facing tariff disadvantages in any of these markets, which is a major change from last year,” she said.
The Link LonkNovember 14, 2020 at 01:45AM
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USMEF expects strong beef exports in 2021 | Livestock - Capital Press
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