Here’s why trade wars with America’s best overseas customers are a bad idea.

Nevil Speer

March 29, 2018

1 Min Read
Do exports really contribute to cattle prices?

There has been lots of talk about international trade in recent weeks stemming from the hubbub surrounding steel and aluminum tariffs. All that is important discussion – especially for the beef industry.  Why? Because beef imports are an easy target.

That said, it’s important to take a fresh look at the importance of the export market to the beef industry. Beef exports are a significant component of beef demand and serve to generate substantial revenue for beef producers.  

Accordingly, this week’s illustration highlights the influence of exports on the beef market. Last year’s beef export value totaled $7.12 billion—a new record surpassing the previous record of $6.98 billion established in 2014. That value spread across every fed steer and heifer is equivalent to about $325 per head. Expressed across the 2017 average slaughter weight, that works out to $24 per cwt. In other words, the absence of exports would back the market up by $24 per cwt, and perhaps even more given the large shift in the supply curve if the market was burdened to clear all of that product domestically.

March-2018--Exports-trade-war.png 

It’s clear that export markets are critical to the market. With that in mind, the politics of late can work to make markets nervous. How do you perceive the importance of international beef demand for the U.S. beef industry? From your perspective, what is the largest threat to continued growth of export markets? Should the industry commit even more checkoff dollars to help promote U.S. beef in international markets? Leave your thoughts in the comment section below. 

Related:Trump trade tactics not for the faint of heart

Nevil Speer is based in Bowling Green, Ky.

About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
 
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
 
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
 
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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