Report calls for beef export demand to continue growth

Feb 20, 2012

In USDA’s recent report, titled “USDA Agricultural Projections to 2021,” the agency predicted U.S. corn prices would average $6.70 per bushel in the 2011/12 marketing year ending Sept. 1, 2012, but remain at or below $5 per bushel for the next nine years.

According to the report, corn producers can expect to average $5 per bushel in 2012/13, then remain in a range between $4.30 and $4.65 through 2022.

The report assumes the 45 cents per gallon tax credit available to ethanol blenders, the 54 cents per gallon tariff on imported fuel ethanol and the $1 per gallon tax credit for blending biodiesel expired at the end of 2011 would not be reinstated.

USDA projected that while about 36 percent of total corn use will go to ethanol over the next decade, gains in corn-based ethanol will be smaller than in recent years.

The report predicted feed and residual use of corn will rise from recent low levels as meat production picks up, corn supplies rise, and corn prices moderate.

According to the report, corn plantings are expected to reach 94 million acres for 2012, and corn yield will be at 164 bushels per acre. Soybeans will see 74 million acres planted in 2012.

On the livestock end, the report predicts continued strong growth in meat demand, especially in many middle- and low-income countries. Projected global growth for overall meat consumption averages more than 2 percent annually over the next decade, with per capita consumption increasing for each major type of meat (beef, pork and poultry).

The value of U.S. agricultural exports exceeded $137 billion in 2011, a new record that largely reflected high commodity prices. With declining prices projected for major crops over the next two years, export values initially fall, according to USDA predictions. But then agricultural export values are projected to grow over the rest of the decade and surpass the 2011 record.

Most U.S. beef exports are high-quality, grain-fed beef, typically going to Mexico, Canada and Pacific Rim nations. A continuing recovery is assumed for U.S. beef exports to Japan and South Korea, export markets that were closed to the U.S. for several years following the first U.S. case of BSE in December 2003. Beef exports by competitor countries of Australia and Canada increase slowly as herds are rebuilt.

U.S. imports of processing beef increase in the projection period as relatively low beef cow slaughter in the U.S. raises import demand. With more beef demand in East Asian markets being met by U.S. grain-fed beef, exports of grass-fed beef from Australia and New Zealand to those markets are likely to decline.

A resumption of world economic growth, particularly in developing countries, provides a foundation for increases in global food demand, trade and U.S. agricultural exports. Continued global biofuel demand also contributes to strong commodity prices and gains in export values.

Furthermore, the continuing depreciation of the U.S. dollar remains an important factor underlying projected gains in U.S. exports.

U.S. agricultural import values rise throughout US- DA’s projection period, mostly in the horticulture area, and reach almost $147 billion in 2021. These increases are boosted by gains in U.S. consumer incomes and demand for a large variety of foods.

While we can make predictions and educated guesses about the future of ag, Agriculture Secretary Tom Vilsack said 2011 was a record breaking year for producers, with U.S. farm exports reaching a record $136.3 billion in calendar year 2011.

“These figures indicate how demand for the American brand of agriculture continues to soar worldwide, supporting good jobs for Americans across a variety of industries such as transportation, renewable energy, manufacturing, food services, and on-farm employment. During the past three years, the U.S. farm sector has continued to support and create jobs on a consistent basis, strengthening an American economy that’s built to last. Every $1 billion in agricultural exports supports 8,400 American jobs, meaning that U.S. farm exports helped support more than 1 million U.S. jobs in 2011.

“Last year, the United States exported an all-time high of $5.4 billion worth of beef and beef products, surpassing the previous record by more than $1.6 billion. The volume of shipments also surpassed the 2003 levels, the last year before a detection of bovine spongiform encephalopathy in Washington state disrupted U.S. trade. The return to pre-2003 levels marks an important milestone in USDA’s steadfast efforts to open and expand international markets. Despite this progress, restrictions continue to constrain exports to many of our key markets and we remain fully committed to breaking down those trade barriers.” — Traci Eatherton, WLJ Editor