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Beef Industry Summer Conference
Joint International Marketing CommitteeTrade Update
Erin DaleyEconomist, USMEF
July 31, 2010Denver, Colorado
Global Beef Overview
Beef Consumption Growth
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
U.S. +4.4% or +538 Thous MT
Rest of World: +17% or nearly an additional 9 million MT which is equal to roughly 80% of U.S. production in 2010
Thous MT
Source: OECD/FAO 2010 Ag Outlook, carcass wt equivalent
Growth comparing 2009 to 2019 forecast:
Per capita beef consumption Lots of room for growth outside the U.S.
0
10
20
30
40
50
60Kg/capita
Source: USDA/FAS 2010 estimate
U.S. Export Growth Outpacing the Competition
January-May Beef Exports
0
100,000
200,000
300,000
400,000
500,000
600,000
2008
2009
2010
+4%-9%
+25%
+3%+18%
Source: Global Trade Atlas, excludes variety meats
Metric Tons
-45%
+17%
+3%
Australia’s Exports
• Down 6% in first half 2010, 436,095 MT
• Down 4% to Japan
• Down 28% but recovering to the U.S.
• Up 17% to Korea but losing Mkt Share to U.S. (exports to these top 3 markets accounted for 77% of Australia’s exports)
• Down 10% to Indonesia
• Largest growth: Russia and Middle East
Brazil’s Exports
• First half total: 560,000 MT, +3.5%• Top markets: Russia, Iran, EU-27, Egypt, Hong
Kong• Growth to Iran, 95,000 MT, +283%• Some recovery in EU but chilled exports are less
than one quarter of shipments prior to 2008; finally over 2,000 farms approved for EU
• Still seen as leading global supplier of the future
Canada’s Exports
• Diversifying away from U.S., market access negotiation success: Hong Kong, China, Vietnam
• Traceability
• More cattle on feed in Canada, more slaughter fed cattle and cows to U.S.
HK4%
Other3%
Japan2%
11%
U.S.80%
Mexico
Jan-May Beef Import Status
0
50
100
150
200
250
300
350
4002008 2009 2010
Source: GTA and USMEF est, excludes variety meats
Thous MT
-15%
+21%
+4%
-7%-21%
+1%
+20%
-5%
+20%
+9%
Who is the Competition?
Importing country: top suppliers, 2009 mkt share
• Mexico: U.S. 80%, Can 16%• Canada: U.S. 66%, NZ 18%, Aus 7%, Urg 7%• Japan: Aus 75%, U.S. 14%, NZ 6%• Korea: Aus 58%, U.S. 26%, NZ 14%• Hong Kong/Vietnam: India 35%, U.S. 23%, Bz
22%
U.S. Beef Exports, Recovery
0
200
400
600
800
1,000
1,200
1,400Variety Meats
Beef
Source: USDA/USMEF
Thousand MT2010F: beef +17%, variety meats steady= 1 MMT, +12% valued at $3.7 billion, +21%; just 3% less than ‘03
U.S. Beef Exports to Top Markets
0
50
100
150
200
250
300
350
400
200320092010F
Source: USDA/USMEF Forecast, thousand MT, includes variety meats
Lost beef export value due to BSE (2004-2010)
• Japan: $8 billion (-$70 million/month currently)
• Korea: $4.7 billion• Others: >$1 billion
Total: ~$14 billion(based on annual export value compared to 2003; estimated for 2004 through 2010)
Source: USDA/FAS data; USMEF estimates
Exports are up this year…Weekly U.S. beef exports through July 15
6%
6%4%
26%
18%
14%
14%
12%
MEXICO
KOREA
JAPAN
VN/HK
CANADA
TAIWAN
RUSSIA
OTHER
1. Mexico -10%2. Korea +114%3. Japan +29%4. Vietnam/HK +39%5. Canada 0%6. Taiwan +27%7. Russia: 16,746 MT
(already a new annual record)
Total: +26%
Source: USDA/FAS Weekly Export Report
Mexico
Japan
KoreaVN/HK
Canada
Taiwan
Russia
Weekly U.S. Beef Exports to Asia*
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1/10
2/10
3/10
4/10
5/10
6/10
7/10
8/10
9/10
10/1
011
/10
12/1
0
2008
2009
2010
Source: USDA/FAS, metric tons, *Korea, Japan, Vietnam, Hong Kong, Taiwan
Jan-July 15: +52%
Growth led by Korea & Japan
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1/7/2010 3/7/2010 5/7/2010 7/7/2010
Korea
JapanVietnam/HK
Taiwan
2010 Weekly Beef Exports to Top Asian Markets
Source: USDA/FAS
Metric Tons
Weekly Short Rib Prices
$1.00$1.20$1.40$1.60$1.80$2.00$2.20$2.40$2.60$2.80$3.00$3.20$3.40$3.60$3.80
2007
2008
2009
2010
Source: USDA/AMS $/pound
Adding ~$15-$20/head
$293 $229 $360
$223
Cutout: $1.54/lb 800 lb carcass
$28$58
$41
Total Cut-out Value $1,232
+$133 from year-ago! +$39 from Chuck! +$37 from Rib +$24 from Round +$21 from Loin
Maximizing Carcass Value
U.S. Monthly Meat Exports to Mexico
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
Pork
Poultry
Beef
Source: USDA/USMEF, GTA, Metric Tons, includes variety meats
Still a price-sensitive market
Asia Has Been the Growth Market Weekly U.S. Beef Exports
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Mexico
Asia
Source: USDA/FAS, metric tons
Weekly U.S. Beef Exports to Russia, back in business
0200400600800
1,000
1,2001,4001,6001,8002,000
2008
2009
2010
Source: USDA/FAS, metric tons
16,746 MT through July 15, 2010 surpassing 2008 annual record: 15,644 MT
Sources of Risk:Market Exchange Rates
Yen
Peso Ruble Won
Sources of Risk:Competitor Exchange Rates
Real A$ C$
Euro
Our Competition…
Who will meet the growing global demand?
-20%
-15%
-10%
-5%
0%
5%
10%Forecast Change in Beef Production 2010/2009
Production Trends for the Top Beef Exporters
0
2,000
4,000
6,000
8,000
10,000
12,000
U.S.
Brazil
Argentina
Australia
Canada
Thous MT
Export Dependence?
0%
2%
4%
6%
8%
10%
12%
14%
2000 2002 2004 2006 2008 2010 2012 2014
Source: USDA/USMEF, percent of beef muscle cuts exported
Export Dependence?
0%
10%
20%
30%
40%
50%
60%
70%
2010 Estimated Exports as Percent of Production
A Challenge to the U.S. Industry
-150
-100
-50
0
50
100
150
200
Change in U.S. Production Change in Global BeefImports
(1,000 MT)
-1.3%
+4%
Source: USDA Ag Outlook, Feb 2010, carcass weight equivalent
2012 Forecasts
EU Imports Chilled Beef
• Currency issue;
• Update on first quota year under the new agreement
