John Michael Riley, Asst. Extension Professor, Department of Agricultural Economics, Mississippi State University

Reviewing U.S. beef exportsThe last time that exports were highlighted in this series was mid-June, so, in light of the reports early last week where it was revealed that Russia would limit it’s imports of U.S. beef, I wanted to take a quick moment to reflect on this topic. The significance of Russia to the U.S.’s export market has been defined in previous reports - Russia has accounted for 6.6% of the 2012 U.S. beef export market through September, up 5.3% from the previous year[1]. While this particular market has shown strength the U.S. remains dependent on domestic consumption. To illustrate, in 2011 our exports notched a high water mark of 2.8 billion pounds, or 10.6% of domestic production. Even as 2011 was a banner year, one that finally returned the U.S. to pre-BSE export levels, exports do not make up a large component of beef utilization. As noted, in 2011 10.6% of the beef produced was exported and that number is currently estimated to decline in 2012 and 2013, respectively to 9.5% and 10.0% of total production. This is further highlighted in the chart provided.

Reviewing U.S. beef exports

The small export market fir U.S. beef was evident in the days that followed the news from Russia as the market shrugged this off, for the most part, with the four nearest futures contracts gaining about 2.45% from December 10 to December 17. Domestic beef demand has shown signs of resiliency since the December 4 publication of this newsletter where John Anderson covered all of the bearish issues facing the economy and beef industry. With strengthening employment news and gains in equity markets acting as a barometer of future domestic economic success, cattle futures have moved higher recently. This has largely been due to concerns related to tightening supplies. Further, what many believe to be steady to moderate increases in U.S. beef demand has helped and collectively, these have trumped any negatives related to lost exports. 

The Markets

Cash fed prices improved slightly on the week.  The 5-area live fed steer price averaged $124.30 per hundredweight, up about $0.50 from the previous week.  U.S. Choice boxed beef averaged $195.04 per hundredweight last week, up about the same at $0.49, while the spread between Choice and Select continues to climb.  Oklahoma feeder prices improved despite stressed wheat pasture as corn prices slipped and feeder futures pushed higher.  Calf prices were mostly steady for the week.  Corn prices lost 31 cents per bushel to close at $7.46 in Omaha.

Reviewing U.S. beef exports

[1] Steve Meyer and Len Steiner, Daily Livestock Report (http://www.dailylivestockreport.com/documents/DLR%2012-10-2012.pdf)