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High dollar and increased competition pressure beef exports

Beef export value averaged $271 per head of fed slaughter in January, $20.26 more than last year, according to the U.S. Meat Export Federation. Beef exports for the month were at a four-year low, however, as shipping delays caused by the West Coast labor dispute and other economic factors weigh on the market.

Wes Ishmael

March 14, 2015

3 Min Read
High dollar and increased competition pressure beef exports

Shipping delays caused by the West Coast labor dispute and a number of economic factors drove export volumes for beef and pork to four-year lows in January, according to the U.S. Meat Export Federation (USMEF).

Even so, beef export value averaged $271 per head of fed slaughter, up $20.26 from last year, reflecting the decrease in slaughter numbers and high U.S. prices. January exports equaled 9% of total beef muscle cut production and just under 12% when including variety meats. Year-over-year, January exports of total beef muscle cut production were down 10%. Including variety meats, it was 13% less.

“We expected January to be a difficult month, so these results are not especially surprising,” says Philip Seng, USMEF president and CEO. “But, I see the January slowdown as a wakeup call for the U.S. industry in terms of the fiercely competitive situation we face in key markets. Conditions are now improving in the West Coast ports, but the damage caused by that impasse is still not finished, and it is clear that competitors capitalized on our inability to move product in a timely fashion. We need to win back the confidence of the valuable Asian customer base we spent many years building.”

Besides challenges from the Pacific Coast port slow-down, Seng explains, “The currencies of several of our major destinations have weakened substantially against the U.S. dollar – not only in Asia, but also in the Western Hemisphere. And unfortunately, the currencies of our major competitors – Australia, the European Union, Brazil and Canada, to name a few – are also in a weakened state. We saw this building throughout the latter half of 2014, and the price disadvantage is increasingly difficult to overcome.”

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This means that beef prices, pushed to historic highs by tight supplies, are even more expensive.

While beef exports are challenged by tight supplies and high prices, Seng notes pork supplies are increasing along with international competition to domestic pork.

Domestic competition for consumer protein dollars could also increase if the highly pathogenic avian influenza (HPAI) found in turkey flocks this week spreads to broilers, leading to closure of international markets.

USDA’s Animal and Plant Health Inspection Service confirmed the presence of highly pathogenic H5N2 in two separate commercial turkey flocks in Missouri, and in one in Arkansas. All are within the Mississippi flyway.

“Traders fret that export bans on U.S. poultry products could leave a glut of white meat for domestic retailers and restaurants weighing on the hog market,” says John Otte, Penton market analyst. “If turkey and chicken prices become even less expensive for U.S. consumers, the concern for pork suppliers is that more food shoppers will opt for the cheaper feathered proteins.”

All told, Otte explains estimates call for 0.3 pounds more red meat and 0.4 pounds more poultry being available to domestic consumers this year compared to 2014.


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