Kay’s Cuts: From droughts to floods

Steve Kay, 14/03/2022

A monthly column written for Beef Central by US meat and livestock industry commentator Steve Kay, publisher of US Cattle Buyers’ Weekly





I HAD the privilege of being invited to speak at the Australian Meat Industry Council’s annual conference every year from 2000 to 2009. Every year, I would arrive at Brisbane International Airport and gaze down at the beautiful river view below.

My good friend Jon Condon (this was pre-Beef Central days) would pick me up and whisk me off to the Condon Estate close to the river. Sometimes we would venture downtown to visit an art gallery or dine at one of the many fine restaurants along the river’s edge.

The next day, we would drive down the motorway to the Royal Pines resort or several others on the Gold Coast, where the annual AMIC processor conferences were held.

On several of my trips, I had the good fortune to visit the Port of Brisbane and several beef processing plants, including JBS’s flagship plant at Dinmore. Imagine my shock then to read Jon’s lengthy report last week of the worst flooding in the region for years and the severe disruption it caused to those very plants I visited, the city downtown and the port.

Just looking at the photos of the flooding made me want to weep. By the time you read this, I sure hope the flood waters have receded and all types of businesses in the region, not just beef processing, are returning to normal.

Exports are the lifeblood of the Australian beef industry, with about 60 percent of all shipments going out of the Port of Brisbane. I trust its closure was strictly temporary.

US beef export growth

US producers also know how valuable beef exports are to the price of their slaughter cattle, even though they make up only 15pc in muscle cuts and by-products of total production.

That value in 2021 per head of US fed slaughter equated to a record US$407, up a remarkable 35pc from 2020. That was because beef exports greatly exceeded previous volume and value records in 2021, surpassing US$10 billion for the first time.

This means exports almost doubled in value in ten years. Exports in 2012 totaled US$5.511 billion in value.

The record 2021 volume of 1.44 million tonnes was up 15pc from a year ago and 7pc above the previous record set in 2018. Export value soared to US$10.58 billion, up 38pc from 2020 and shattering the previous record (also from 2018) by 27pc.

Exports accounted for 15pc of total US beef production and 12.8pc for muscle cuts only, up significantly from the respective 2020 ratios of 13.5pc and 11.3pc, says the US Meat Export Federation.

The beef export results were truly remarkable, especially considering the COVID-related obstacles in the global food service sector and all the supply-side and logistical challenges faced by the US industry, noted USMEF president and CEO Dan Halstrom last month.

Obviously the US’s large Asian markets accounted for much of the growth, but it really took broad-based global demand to reach these impressive levels. This success story is not just about Korea, Japan and China but also a strong performance in Taiwan, excellent growth in Central and South America and a rebound in Mexico and Southeast Asia, he said.

Another remarkable milestone in 2021 was that beef exports to South Korea, Japan and China/Hong Kong each topped US$2 billion, with Korea becoming the highest value market for US beef for the first time.

Japan remained the leading volume destination for US beef exports in 2021 at 320,737t, up 5pc from 2020 and the second largest of the post-BSE era, said USMEF. Export value climbed 22pc to a record US$2.376 billion but finished a close second to Korea.

China growth for US exporters

Another huge achievement was the exceptional growth in US exports to China. I remember being skeptical a few years ago when predictions were made about the country becoming a US$2 billion market for US beef. Now that is close to a reality.

Exports to China/Hong Kong also broke the US$2 billion mark at US$2.09 billion, up 114pc from 2020, said USMEF. Volume climbed 87pc to 240,827t.

Direct exports to China, which started to gain significant traction in mid-2020, jumped 346pc in volume (190,800t) and 413pc in value (US$1.59 billion). US beef accounted for 6pc of China’s total imports in volume and 11pc in value last year.

Grainfed beef now accounts for 11pc of China’s imports, with the US as the largest supplier, providing 68pc of China’s grainfed imports, said USMEF.

Variety meats were another export success story for the US last year, and showed why by-product values remain high.

Often referred to by packers as the fifth quarter of a cattle carcase, the combined value of 16 items often approaches or exceeds $200 per head. This is for a slaughter steer reported daily by USDA, using a 1400 pound (635kg) liveweight. Many of those 16 items have no domestic market outlet, making their exports vitally important in adding value to US fed cattle.

US beef exports however are likely to ease this year because of tighter supplies and higher US prices, says USDA.

In its Livestock and Poultry Outlook 2022 report the week before last, USDA forecast total beef exports to decline to 3.27 billion pounds (1.486 million tonnes). Exports are likely to be pressured by tightening domestic beef supplies and the resultant higher prices may make US beef less price competitive, it said.

Furthermore, increased beef production in export-oriented countries such as Australia and Brazil will likely increase competition in several markets.






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