Significantly fewer cattle imports from Mexico will continue to tighten U.S. supplies further.
“Although total annual imports of Mexican cattle in 2012 were the second largest on record, the rate of imports dropped dramatically in August 2012 and has continued to date,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. “So far in 2013, imports of Mexican cattle are down 46% year-over-year, a decrease of 459,000 head through July. Mexican cattle imports are expected to continue below year ago levels for the remainder of the year, although the percent decrease will be smaller when compared to the decreased monthly levels in the second half of 2012.”
Peel attributes sharp decrease in Mexican exports to severe, drought-driven liquidation of that nation’s cow herd in recent years. Reduced beef production there is making it tougher on consumers.
“Reduction in beef production is likely limiting beef supplies for export and simultaneously increasing beef import demand in Mexico to maintain domestic market supplies,” Peel explains. “Though data to confirm these apparent impacts are limited, it appears that the shortage of cattle in the Mexican market is very acute. Reported prices for slaughter cattle in Mexico have been higher than U.S. fed cattle prices, adjusted for exchange rates, for most of 2013, with Mexican slaughter cattle prices exceeding U.S. prices by roughly 5% in June and July. It is difficult to predict if these recent trends will continue but it appears that the remainder of 2013 and 2014 is likely to be characterized by little or no growth in U.S. imports of Mexican beef; potential for the first year over year increases in beef exports to Mexico since 2008; and severely restricted imports of Mexican cattle.”
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