This may have some impact on the meat price index as consumer demand continues to be hampered by economic uncertainty.

The FAO expects global meat output to expand by nearly 2 percent in 2012 to 302 million metric tons (MT), reflecting increased poultry and pork production across developing regions of the world.

As key importing countries raise their own domestic output, this is expected to lead to greater competition for export markets.

Global beef production is expected to remain unchanged from the previous two years at 67.5 MT, with growth in developing countries offset by lower production in developed countries.

The global beef trade is anticipated to increase by 4 percent to 8.1 MT, driven by higher import requirements in the U.S. and European Union (EU) in response to short domestic supplies.

Shipments to Russia are also expected to increase on the back of lower domestic output combined with an increase in import quota of reduced-tariff beef. Global pork production in 2012 is forecast to recover by 3 percent to 111.7 MT.

This growth should be underpinned by reduced disease levels, stronger investment and favorable market returns, with China at the forefront of this expansion.

The FAO expects some marginal fall in EU pork production to 23 MT in 2012 due to the EU animal welfare regulations that will take effect from the start of 2013.

Global lamb/mutton supplies are expected to increase slightly to 13.6 MT. This is expected to relieve some of the tightness in global supplies.

Most of the increase is expected to originate from non-meat trading countries in Africa and Asia.

Meanwhile, the U.S. domestic manufacturing beef market continued to experience differing trends in the price of higher-fat 50 percent lean (50CL) and 90 percent lean (90CL) beef trimmings by early July.

Just as the price of 50CL beef trim declined 50 percent year-on-year, the price of lean beef averaged 18 percent above year-ago levels.

As U.S. retailers bid up prices for domestic fresh lean and extra lean product, at a time when U.S. cow slaughter tightens, more muscle cuts have reportedly been added to grinding, including knuckles, flats and rounds.

Following the seasonal slowdown in demand post-Memorial Day, trading volume was reportedly thin, with both U.S. domestic and imported lean grinding indicators easing from previous months.

U.S. imported lean beef prices declined on average 0.5 U.S. cents to $1.95 per pound, with Australian exporter returns on 90CL beef to the U.S. easing 1.5 cents to $1.83 per pound.

The U.S. domestic fresh lean trimming indicator fell 8.8 cents, to $2.19 per pound. While beef supplies from New Zealand are expected to decline as cattle slaughter decreases seasonally, Australian eastern states’ cattle slaughter was reportedly 4 percent lower in June.

Brazil
After a sluggish start to the year, Brazilian beef exports for the first five months of 2012 are now 3.1 percent above year-ago levels, at 339,000 metric ton (carcass weight equivalent).

Contributing to the price competitiveness of Brazilian beef has been a significant decline in the strength of the Brazilian currency, the real, along with an increase in cattle throughput.

The real decreased 18.4 percent year-on-year to the end of May, falling from a high of 62 U.S. cents in May 2011 to average 49 cents in recent weeks.

The depreciation has been influenced by a significant tightening of monetary policy within Brazil, with the Brazilian Central Bank cutting interest rates by 400 basis points since August 2011.

These interest rate cuts come as Brazilian policy makers look to shore up an increasingly sluggish economy.

The World Bank revised down its 2012 growth forecast for Brazil from 3.4 percent to 2.9 percent in its latest global outlook released in June.

The decrease in the real has come at an opportune time for Brazilian beef exporters, as supplies have increased with the onset of the dry season.

The increased supplies have also been reflected in the physical market, with the Sao Paulo cattle market index decreasing from $1.47 per pound in January to $1.38 per pound as of 13 June.

Although Brazilian beef exports have increased in the five months to the end of May, exports to Russia, historically Brazil’s largest beef export market, have started 2012 slowly.

The ban put in place by Russia on a number of Brazilian beef processing plants in June 2011 has limited the amount of Brazilian beef able to access the Russian market, constraining export growth.

An increase in exports to other markets has helped to compensate for the reduced market access into Russia, including to Chile, Hong Kong and Egypt.

Russia
Long-range goals show Russia will cut beef imports and produce more home-grown beef with the right cattle breed and an experienced Oklahoma cattle rancher.

With an annual bill of $3 billion, Russia is the world’s largest importer of beef.

President Vladimir Putin wants to cut imports by producing 85 percent of Russia’s meat needs within the country by 2020.

Bloomberg reports Anthony Stidham, a 48-year-old third-generation rancher from Oklahoma, is sharing his knowledge with Russian producers to boost local beef supplies.

Stidham was recruited to the country’s largest beef farm located 400 kilometers southwest of Moscow after responding to an ad in a farm publication.

Stidham is adjusting to Russia’s climate, which is drastically different from Oklahoma. Temperatures in Russia dip to -35ºF and finding a cattle breed that could thrive in those conditions was a challenge.

Angus were selected because they can adapt in any climate. The country has already received 60,000 Angus cattle from the U.S. and Australia.

Beef demand in the country is growing along with an expanding middle class. Moscow has added more than 30 steakhouses since 2004 and annual beef per-capita consumption is set to rise according to the Moscow-based National Meat Association. 

Clint Peck is the owner of Global Beef Systems, LLC.