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Waiting for our pitch

Apr 14, 2017

Plenty of headlines have come out of Washington D.C. since the inauguration three months ago, but none have been more beef friendly than the news released April 10.

President Donald Trump met with Chinese President Xi Jinping to discuss a variety of topics. North Korea and their nuclear systems testing was a focus of the talks, but the topic of China once again allowing U.S. beef into what is undoubtedly the largest available export market came up. What was scheduled to be a one-hour meeting on trade reportedly took five.

This is a great win for America’s beef producers.

Remember that China has verbally agreed to accept U.S. beef twice since they closed their doors in 2003 when a rogue BSE case was confirmed in Washington State.

During his campaign, Trump ferociously pushed to return fairness once again to current trade deals. Hopefully guidelines for beef exports surface in the near future and U.S. beef suppliers can adjust to the latest demands set forth by China’s officials. If this does in fact happen, these actions could really charge our markets forward.

What remains to be seen over the next 100 days is dependent on the political scope surrounding a few key Asian countries. North Korea is the wild card, but if the U.S. and China continue to work together to resolve these issues, our markets have an opportunity for a great expansion.

The problem lies in the fact that the chances of everything playing out in the beef market’s favor are still pretty slim. When I reached out to representatives of the U.S. Meat Export Federation, their expectations were tempered, but the indication is clearly positive. One thing is for sure; the next three months will be interesting to watch.

An exciting point worth making is that the U.S. is set up for major success if the Chinese market does, in fact, open up. Our focus on higher-quality product—high Choice or better—is our greatest key to market access into the Asian continent. It has already opened important markets, making us the largest beef exporter into both South Korea and Japan. The quality of our product is the greatest preparation to make a global push in the event China really does open to U.S. beef.

A recent Certified Angus Beef report on beef grades showed a new USDA record; in the first quarter of 2017, 72 percent of all USDA-graded cattle received a Choice or better grade, nearly 10 percent higher than any previously reported data.

Over the past few decades, American’s beef producers have become more data-conscious. Through things like branded beef programs, more options for retained ownership, and data-driven decisions, America’s cow herd today is more likely to grade higher than our cow herd yesterday. That trend looks to continue. The feeding conditions of the past three years created a perfect storm for quality, allowing cattle to achieve such a high percent of Choice+ grades as USDA reported.

Furthermore, our production system has the ability to supply a larger amount of higher-quality product that can be shipped all over the world than any other country. We truly have an edge over every single global competitor we have. I doubt the U.S. will be the sole supplier of beef to China, but we definitely have a more advanced feeding system that can produce an exponentially greater amount of product than any other country.

With baseball season just starting up, I’ll use the analogy of a hitter waiting on his favorite pitch. All the factors have to align: the count, runners on base, how many outs, and so forth. But if the hitter sees that pitch and connects, it’s a change to the scoreboard.

Our beef market is in the same situation. Several factors are currently being lined up, and if everything continues this way, we could really see a change. We don’t know how great the impact would be on our markets; we just know it would be massive. We are essentially waiting for China to send us our pitch.

As I mentioned earlier, expectations need to be tempered. But we are well-prepared, if nothing else, to become China’s main supplier. We have a different administration now, so we will see how things play out in the next few weeks. Hopefully China will send us a pitch we can hit out of the park. — LOGAN IPSEN

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