CattleFax exports analyst Brett Stuart said the demand for U.S. beef across borders and ocean shores remains strong, and the trend is redefining the trend for goods sold in foreign markets.
“I can look at any global agricultural commodity – corn, cotton, pork – going back to the 1960s, and in terms of production, they all keep up with population. Except for one, it’s beef.
“We’ve now gone eight years with virtually zero production growth. During those eight years, we’ve added 680 million people to the planet. That’s two Americas. We’ve added $14 trillion in GDP globally, but zero additional beef on the market. Does that help explain why prices are the way they are?”
Stuart said that overall global beef production is expected to decline in 2015 from 2014 levels. CattleFax predicts there won’t be a significant increase in global beef production until 2017 or later.
As for exports into the coming year, CattleFax is forecasting exports dropping between 2 and 4 percent, with imports increasing slightly. The import volume will largely be set by how much Australia can sell after its heavy culling from drought.
“We now have a niche product that people are willing to pay for over and above the price of global beef. I think this is going to continue.”
But while U.S. producers keep trying to expand herds and boost beef output, the industry needs to carefully observe export trends and foreign markets, Stuart warned.
One key measurement is the growth of the U.S. dollar. Other currencies are not keeping up with the U.S. market, which diminishes their ability to buy U.S. goods.
“The dollar rate does not correlate very well at all with beef export volumes,” Stuart explained. “Beef is a perishable commodity; you can’t sit on it like grain and wait for the exchange rate to move and play that game.”
Using historic trends of the past 10 years, Stuart said the dollar has appreciated 12 to 18 percent against competitors and buying partners in the past six months.
“If [the dollar] stabilized, global demand would remain intact. But if we go another six months and put 15 percent [growth] on the dollar, we’re going to start to feel more pushback.”
Another major threat is the looming decision from the World Trade Organization, presumably in summer, ending all appeals and determining that American Country of Origin Labeling restrictions are detrimental to Canada and Mexico.
“We’re probably going to lose the appeal, as far as I can tell,” Stuart said, which will be followed by Canada’s petition to remove the law. If that doesn’t happen, retaliatory tariffs will be made on U.S. products.
“If we don’t get an intervention for this, we may wake up one day in 2015 and see 100 percent duties on our products to Canada and possibly Mexico. It’s going to take some heavy attention from Congress and USDA to head this off.” 
PHOTO
CattleFax exports analyst Brett Stuart speaking at the 2015 NCBA Cattle Industry Convention. Photo by David Cooper.
