- US beef imports from Australia are up 52,000 metric tons (45%) year-to-date due to tight US supplies and record high prices for lean grinding beef. - Australian beef exports to the US are expected to remain well above year-ago levels for the next two months as shipments help address short supplies. - While Australian imports have increased, imports from Canada have declined sharply due to lower Canadian beef supplies.

1. Vol. 10, No. 206 / October 24, 2012
Market Comments
Tight supplies and record high prices for lean YTD CHANGEIN US BEEF IMPORTS 22, 2012 VS. COUNTRY, MT
YTD CHANGE IN US BEEF IMPORTS COUNTRY, MT, SW BY BY
BASED ON WEEKLY BEEF EXPORTS FOR PERIOD JAN 1 - OCT JAN 2 - OCT 24, 2011
grinding beef in the US have supported a notable increase BASED ON WEEKLY BEEF EXPORTS FOR PERIOD JAN 1 - AUG 30, 2010 VS. JAN 2 - AUG 31, 2009
in US beef imports so far this year. Beef imports from Austral- OTHER COUNTRIES Net vs. Yr. Ago
ia (based on Customs data through Oct 22) are up some 52,000 MT OTHER COUNTRIES
52,674
or +45% compared to the comparable period a year ago. Based on URUGUAY
URUGUAY
+9.6%
the pace of Australian shipments so far, we expect entries of Aus- NEW ZEALAND
tralian beef to remain well above year ago levels for the next two NEW ZEALAND
months as well. Our estimate is for Australian October exports to MEXICO
MEXICO
the US (which is beef that arrives here 3-4 weeks later) to be
JAPAN
around 18,000 MT, some 47% higher than a year ago. The high JAPAN
price of lean grinding beef in the US is one reason for the surge in CANADA
CANADA
Australian shipments to the US. Also important to note is that
beef supplies in Australia have improved somewhat compared to AUSTRALIA
AUSTRALIA
last year when producers were in full blown rebuilding mode,
thanks to plenty of forage supplies in the spring (southern hemi-
sphere). Demand for Australian beef in some key markets has ARGENTINA ****
ARGENTINA
also declined this year. Shipments to Japan have slowed down
BRAZIL ****
BRAZIL
considerably. They were down 5% in August, down 20% in Sep-
tember and they could be down 20% again in October. Australian metric ton (40,000) (30,000) (20,000) (10,000)
(40,000) (30,000) (20,000) (10,000) -- 10,000
10,000 20,000
20,000 30,000
30,000 40,000
40,000 50,000
50,000 60,000
exports to South Korea are down some 21% for the year as well
while shipments to the Russian market since this summer are ** Brazil and Argentina were estimated as they are not repoited in the Customs update
about half of what they were last year. With Brazilian plants once
again allowed to ship product to Russia, and thanks to the depreci- and the risk of a price reversal due to outside market factors
ation of the Brazilian Real vs. the Russian Ruble, Brazil has once (currency, global commodities, etc).
again become the primary beef supplier to the Russian market.
Trade flows are fickle, a function of changes in exchange rates, While imports of Australian beef have been strong this
government policy (overt or implied), and overall competitiveness year, imports from Canada have declined sharply. Canada
of markets around the world. The latter is key as US supplies of domestic beef supplies are notably lower, with steer and heifer
lean grinding beef are expected to remain tight into the next two slaughter down 5% for the year and cow slaughter down a little
years. The US market should become much more competitive in over 12%. A couple of other interesting points with regard to
2013. It will have to be in order to fill the supply hole created by the import data. The latest USDA WASDE report noted that US
the cow liquidation of the past three years. The surge in Australi- beef imports are expected to be up 15% for the year. That may
an beef shipments has helped ameliorate the situation although it be a bit optimistic as we are up just 9.6% with only two months
as not fixed the lean beef shortage sitaution. Indeed, what it has left. Next year USDA has pegged imports to be up 11% and we
done is return the dynamic in the grinding beef market to where it think that number clearly is achievable given the expected pre-
was a few years ago, with domestic lean beef trading at a healthy miums for lean beef implied by cattle futures. New Zealand and
premium. This is largely due to the fact that most large retailers Australia should remain strong in 2013 but we could see a slow-
do not include frozen imported beef in their ground beef packages. down in imports from Mexico. In part this is because the vol-
This is not for any patriotic reason, rather it reflects the extra ef- umes have become large enough that the current growth rate is
fort required to manage this supply, the labeling requirements, the not sustainable given their supply base. Canada imports will be
changes needed to internal specs and yield issues. Foodservice steady to lower and growth in imports from other markets will
demand for imported beef has been volatile this year. End users be limited due to the quota constraints. Cooked beef imports are
remain loath to own plenty of invntory given the high price levels a wild card, largely dependent on trade policy decisions.
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