USDA forum: 2005 beef exports seen rising without Asia

Cattle Market & Farm Reports, Editorials
Feb 28, 2005
by WLJ
USDA economists expect 2005 U.S. beef exports to rise, even without a border reopening in Asian countries, USDA Chief Economist Keith Collins said last Thursday.
Collins made his remarks while speaking to a gathering at USDA's annual Agricultural Outlook Forum.
However, although trade with Mexico and other countries will grow in 2005, it still would be only a quarter of the level in 2003, before nearly all U.S. beef export markets were closed after finding an imported dairy cow in Washington state with bovine spongiform encephalopathy (BSE), Collins said.
In addition to the beef export increases, stronger foreign economies and resumption of more normal trade with Russia and China likely will increase pork and poultry exports, Collins said.
Pork exports were a record in 2004 and are forecast to be five percent higher in 2005, he said. Demand for U.S. pork has been strong in Asia and in Mexico where economic growth is good, and the weaker U.S. dollar is contributing to the strong performance estimates.
What's more, export strength for pork should carry over into 2006, even as bans are lifted on beef because beef markets will be slow to rebuild and pork prices should be lower.
Lower broiler parts prices, compared with mid-2004, are helping exports currently, Collins said, and trade issues with China have been ironed out. U.S. broiler markets are expected to continue growing, especially in a variety of smaller markets like former Soviet block countries and the Caribbean.
On the home front, U.S. livestock markets have been quite strong. A comparison of per-capita meat consumption and the Consumer Price Index for all meat illustrates this well, Collins said.
Prior to 1998, there was a standard supply-and-demand relationship of higher prices when supplies were tight and lower prices when supplies were high, Collins said. But after 1998, the relationship changed as production and consumption rose, while live animal and retail prices also rose.
Despite BSE and the loss of beef export markets, cattle prices set a record high in 2004 when the cattle cycle bottomed and beef production was down 6.5 percent, he said. For 2005, with Canadian fed and feeder cattle expected to begin crossing the border on March 7, beef production is expected to rise 4.5 percent, and cattle prices could decline about two percent from the 2004 record-high price and be in the low-$80 range, which should carry over into 2006.
Collins attributed that change to strong consumer demand for meat protein, improving restaurant and hotel business, improved diversity and quality of meat products and a better world economy.
Once the backlog of Canadian cattle works its way through the system this year, beef production will be limited by tight cattle supplies, Collins said.
Despite high hog prices last year, hog producers have been cautious about expanding, Collins said. In 2005, hog slaughter is expected to be only slightly larger than last year, with pork production up less than one percent.
Hog prices will be lower in 2005, he said. Prices are forecast in the upper $40s per hundredweight but would still be nearly $10.00 higher than average hog prices from 1998 to 2003. Hog prices are likely to remain fairly steady next year, with a little larger increase in output than in 2005.
Broiler production in 2005 is expected to be about three percent higher as producers respond to prices that stay relatively high, Collins said. Production is expected to expand two to three percent into 2006.