BEEF Bits

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Dec 12, 2008

BEEF Bits

Australia expecting red meat shortages

A major Australian red meat processing company says there are going to be major supply shortages over the next seven or eight years. Gary Hardwick’s family business in Victoria slaughters 3,000 cattle and about 14,000 sheep each week. He says stock numbers are under great pressure because of drought and competition for land from other agricultural industries. “A lot of land has gone to dairying, especially in Victoria, over the past seven or eight years,” he says. “More hobby farms are developing all the time which are taking good farmland, and it’s not as productive as it would be in the hands of a full-time farmer.”

No liquidity issues, claims JBS

JBS S.A. CEO Wesley Batista told investors recently that his company’s financial strength in terms of cash flow and decreasing debt leverage will help sustain JBS during a global economic crisis.

“We have no concerns about liquidity today,” he said. Analysts have said JBS enjoyed such a cash position because it hasn’t been able to buy National Beef Packing Co. while the Department of Justice seeks to block it in court, but Batista scoffed at the notion, saying, “We have done many acquisitions, and all of them were done with the right finance structure.”

Packers cutting slaughter levels

Livestock analysts said lower wholesale beef prices forced packers to cut slaughter levels. Total slaughter finished the week of Dec. 5 at some 618,000 head, representing an almost 7.5 percent drop from the year-earlier period, with steer and heifer falling 7.8 percent to 486,000 head from 527,000 head and cow and bull slaughter declining 5 percent to 132,000 head. Analysts noted two additional factors are affecting the cattle complex: plummeting feeder cattle prices due to limited demand from feedlots and a sharp decline in cattle hide/offal values owing to a decline in export prices.

Uruguay, South Korea near deal

A deal to ship raw beef from Uruguay to South Korea is drawing near, say analysts. Korean health inspection officials were set to arrive in Uruguay on Dec. 7, marking the final step before purchases of fresh beef are approved, according to Luis Alfredo Fratti, president of the government-run Uruguayan Meat Institute. Uruguay is betting that even as there is evidence South Korean shoppers are once again buying U.S. beef, there is room to serve the population still wary of the U.S. product. Fratti said Uruguay’s grass-fed cattle are free of illness and antibiotics. Only one out of five South Koreans say they will buy U.S. beef, according to a survey of 1,072 people conducted Nov. 14 to Nov. 19 by Maeil Business Newspaper.

U.S. beef exports to EU growing

New data show that U.S. beef exports to the European Union (EU) continue to grow, heralded as encouraging news in light of the problems in global financial markets. Totals for the first half of the current quota year (July 2008 through June 2009) are on a pace to exceed the total for the entire previous quota year. EU importers filed applications to bring 543 metric tons (1.2 million pounds) of U.S. beef into the region in November, raising the total since the start of the year to 3,609 metric tons (7.9 million pounds). The U.S. annual high quality beef quota is 11,500 metric tons.

USDA updates COOL Web site

USDA’s Agricultural Marketing Service (AMS) recently modified its country-of-origin labeling (COOL) program’s Web site. A link to the National Animal Identification System homepage and two informational brochures with regulatory information for retailers, consumers, producers and suppliers have been added by AMS. The brochures, dated Nov. 12, 2008, are located under the New Guidance Documents section of the Web site. To receive updates on new guidance documents, interested parties may subscribe to the site’s new listserv. Subscribers will receive an e-mail when a new guidance document is posted or when an existing document is changed on the COOL Web page.

Per capita beef consumption down

Despite the larger supply of red meat and poultry available earlier this year, per capita consumption on a retail weight basis was not much higher than last year. In fact, both beef and pork per capita consumption at retail was lower than a year ago over the eight-month period mostly due to larger exports, below year-ago imports, as well as an increase in frozen stocks and the U.S. population. In 2007, estimated U.S. per capita total red meat and poultry consumption (retail weight basis) was 221.3 pounds per person, a record amount. However, contraction in the hog and poultry industries combined with lower slaughter cattle numbers suggests total per capita consumption will be down in 2008.

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