Weak US Dollar results in US beef imports dropping 10% year-on-year
A weak US Dollar in May has resulted in a weakening of US beef imports for the month, with the latest USDA beef outlook estimating imports to be down 10% on May 2015 levels.
In May, the USDA found that imports were lower from Australia (-35%), Brazil (-23%) and Uruguay (-52%), while imports increased from New Zealand (+8%), Canada (+16%), and Mexico (+21%).
Processing-type beef imports from Australia are expected to decline through the remainder of the year as favourable weather continues to support herd rebuilding.
Australian beef production remains well below year prior levels, which the USDA has said will limit the volume of Australian beef available for export.
The forecast for US beef imports in 2016 was raised to approximately 2.9 billion pounds on higher than anticipated imports from New Zealand during the second quarter.
However, according to the USDA, beef imports from New Zealand should begin to steadily decrease over the next two quarters as the country’s rate of cattle slaughter declines.
The beef imports forecast for 2017 remains unchanged from the June forecast at 2.6 billion pounds.
Meanwhile, after a slow start the first four months of 2016, US beef exports increased in May.
Beef exports to Canada in May were modestly higher than the previous year and the USDA has said that May’s increase in beef exports is indicative of stronger demand for US beef products by foreign buyers.
Also, the USDA has said it is noteworthy that during the month of May the US Dollar index continued to weaken relative to other major currencies, supporting higher exports from US beef suppliers.
Exports to South Korea, in particular, were exceptionally high in May, where the cattle inventory remains constrained, resulting in lower beef production and higher volumes of imported beef this year.
Volume-wise, Japan remains the top market for US beef and cumulative beef shipments to Japan through May 2016 were up 6%.
Currently, the US is experiencing a competitive advantage in beef production relative to other major beef producing countries and has increased its market share to Japan and other countries which the USDA has said is at the expense of significantly lower beef exports from Australia.
The 2016 forecast for US beef is nearly 2.5 billion pounds, 9% higher than 2015. Total beef exports are expected to increase further in 2017 to 2.6 billion pounds.