However, many producers and re-stockers believe they are still able to make a profit.

Meat and Livestock Australia’s chief economist Tim McRae said the price declines appear to be tied to the return of dry conditions.

“We saw a lot of cattle come onto the market during October and November as producers prepared for a hot, dry summer,” McRae said.

He added that producers were also being cautious with how much they de-stocked because many of them had been rebuilding their herds for the past two years and didn’t want to go backwards.

“The big thing to watch for the next few months is how the northern wet season shapes up and how far south the rain comes,” McRae said.

The lower cattle prices mean export volumes have increased. December was a record month of exports, with sales to China reaching 7,955 metric tons (MT) – almost equal to the entire volume shipped in 2011.

Exports to both Korea and Japan remain below last year’s levels, with Japan down 7.5 percent and Korea down 20 percent, because of strong competition from the U.S. in both markets.

McRae said Australian beef prices had also been strongly affected by the weaker demand. This decreased demand is expected to continue but will depend on competition from the U.S.

“The U.S. beef market is facing supply issues which could prove positive for the Australian market,” he said. While this year has been another volatile one for beef producers, McRae said decent levels of rain will see confidence increase significantly.

Argentina
Late last fall, the office of the U.S. trade representative asked the World Trade Organization (WTO) to establish a dispute settlement panel to examine Argentina’s import restrictions on all U.S. goods.

Argentina’s import licensing requirements are discretionary and unfairly restrict U.S. exports, said U.S. Trade Representative Ron Kirk.

Other import requirements by Argentina also create a disadvantage to U.S. exporters, the office said.

The European Union, Mexico and Japan have also requested panels to look at Argentina’s import restrictions, the trade representative said.

The U.S. requested WTO consultations with Argentina. Argentina requested WTO consultations with the U.S. in a formal complaint of its own.

Among its objections are the U.S. import prohibition of fresh chilled or frozen beef from Argentina and failure to recognize certain areas of Argentina’s territory as free of foot-and-mouth disease (FMD).

The two counties held consultations on Sept. 20-21 but did not resolve the dispute.

Following several years of drought, government intervention and herd liquidation, Argentinean beef exports continued to fall in 2012, down 21 percent year-on-year and the lowest total in 10 years.

While in past decades Argentina had been firmly placed among the top five beef exporting nations in the world, it has slipped considerably in recent years, with the most recent USDA figures placing it 11th in 2012.

The decline in export volumes has largely mirrored the drop in cattle numbers, beef production and rising production costs.

In 2006, the Argentinean herd stood at 60 million head – compared to an estimated 49 million head in 2012.

Also contributing to the decline in exports was the decision by the Argentinean government several years ago to ensure an adequate beef supply domestically.

In order to achieve this, the government implemented export quotas, which increased beef prices for the international market and reduced the competitiveness of Argentinean beef.

Such controls also impacted the slaughter market, with the number of slaughterhouses decreasing 65 percent in the past five years.

Argentina is the largest European Union beef quota holder with 29,375 MT, which represents 44 percent of the total allocated EU quota to eligible nations.

Last year (2011-2012), Argentina only shipped 64 percent of its EU “Hilton Quota” allocation, exporting a total of 18,800 MT.

The latest USDA report on Argentina forecasts the cattle herd to increase 3 percent in 2013, to 51.1 million head, with exports to rise 6 percent to 180,000 MT.

Brazil
In early January, Peru banned beef imports from Brazil for about 90 days due to the World Organization for Animal Health (OIE) announcement that a dead cow from 2010 tested positive for bovine spongiform encephalopathy (BSE) in Paraná state.

According to the Lima-based National Service for Agricultural Health (Senasa), Peru will prohibit such meat products as beef offal, small intestine and any others known to transmit the disease.

Peru will also cancel all import permits for these products except for those already in transit which, according to the Senasa, will be subject to a health control and inspection process upon their arrival.

The 90-day period may be extended or reduced depending on further information received by the Senasa on the issue.

Five countries have implemented full or partial bans on Brazilian beef imports since confirmation of a case of atypical bovine spongiform encephalopathy (BSE), or mad cow disease, in a cow that died in 2010.

Atypical BSE cases can occur spontaneously in elderly cattle, and the 13-year-old animal in the Brazilian case never developed full-blown BSE, instead testing positive for a protein that is the causal agent of mad cow disease.

Brazil had previously launched a diplomatic offensive to fend off restrictions over the death of the cow in the southern state of Paraná.

But now Brazil has promised to take retaliatory action against countries rejecting its beef, saying there are no grounds for such action.

The president of Brazil’s national cattle industry association Uniec, Francisco Victer, credited the government for trying to clear the air and said that if it were not for Brazil’s well-developed national animal health system, the case might have remained undiscovered and never turned into global news.

A similar case of atypical BSE occurred in the U.S. in April. Like the Brazilian cow, that animal never entered the food chain. The event had no major effect on U.S. beef exports. 

Clint Peck is former director of Montana’s Beef Quality Assurance program.