U.S. beef imports in 2008 are 23 percent lower than 2007 year-to-date through August, but increases are seen for 2009 as the U.S. dollar strengthens and domestic cow slaughter decreases. Exports of U.S. beef will benefit as strong demand in Asia continues to grow despite global economic turmoil. U.S. exports are expected to increase 31 percent in 2008 and 10 percent in 2009.
Cattle Outlook: Total federally inspected cattle slaughter is declining seasonally, compared with recent months, as a result of the current economic situation, seasonally increasing steer and heifer dressed weights, and seasonally declining wholesale beef cutout values.
Dairy Outlook: Milk production in 2009 is forecast to rise slightly as yield increases counter declining cow numbers. Exports, which have boosted total demand both this year and last, will be lower next year, taking the edge off prices. Lower prices could help boost domestic demand slightly in 2009.
The global financial crisis has caused volatility in foreign economies and exchange rates. Since the summer, the U.S. dollar has strengthened against most major beef trading partners’ currencies. The weakening of the global economy has again made the U.S. dollar attractive, as it is perceived as a safe-haven currency. While the impacts of the current currency volatility won’t be clear until future trade numbers are released, currency fluctuations can be expected to affect the relative price of U.S. beef in international markets.
Imports of beef into the United States have been down significantly in 2008 from 2007 quantities, down 23 percent through August according to official Department of Commerce figures. Much of the decrease in imports has been due to the combination of high domestic supplies and expensive products from foreign sources. U.S. cow slaughter this year has been at its highest levels since 1997, resulting in a large supply of domestic processing meat, such as lean trim. The weak dollar relative to major exporters’ currencies—Australia, New Zealand, and Canada—has made foreign beef relatively more expensive. In particular, as emerging markets for beef grew, foreign suppliers were able to continue exporting beef to non-U.S. markets at relatively attractive prices.
Domestic cow slaughter is forecast to remain high through 2008 before declining in 2009. Availability of beef from Australia, the United States’ largest foreign supplier, is expected to be limited as Australian producers expand their herds after several years of drought-induced liquidation. However, if the dollar continues to strengthen as it has since the summer, it would impact the price spread between foreign and domestic beef. Total beef imports into the United States in 2008 are expected to be 2.493 billion pounds, an 18-percent decrease from last year. Beef imports for 2009 are expected to increase 7 percent from 2008 levels, to 2.675 billion pounds.