Rising beef prices have not slowed U.S. beef exports, according to recent data from the U.S. Department of Agriculture. U.S. beef exports last week were the highest in more than a decade at 52,000 metric tons, the most since 96,044 metric tons were sold in December 2001.
Nearly a quarter of last week’s beef exports went to drought-hit Mexico, which bought 11,700 metric tons during the week ended March 15. South Korea, another major U.S. market, bought 10,600 metric tons. America’s largest beef customer bought 8,900 metric tons last week.
Early trading in cash fed cattle markets this week suggest a higher tone to the market. Live sales on Wednesday in southern feedyards were at $126 per hundredweight, steady with last week. But northern feedyards traded at $127 to $128 live, and dressed sales were quoted at $203 to $204 per hundredweight. Supplies of market-ready cattle are tight, and weekly slaughter numbers are down, which leaves retailers and exporters competing for smaller supplies.
“There was a lot of sentiment out there that exports and these high prices for beef were definitely going to ration consumer demand,” Tregg Cronin, analyst with Country Hedging told Reuters. “The fact that we had this impressive weekly export number kind of flies in the fact of that.”
Domestic retail beef prices have hit consecutive record highs for five straight months through January, before easing back slightly in February.
Mexico’s drought has totaled more than a billion dollars in crop losses and cut the nation’s cattle herd. Mexico’s drought has also produced an increase in U.S. live cattle imports.
USDA’s monthly report put overall beef exports at 182.2 million pounds in January, down 4 percent from 2011. Mexico bought 38.2 million pounds in January, compared with 38.9 million pounds in January 2011.
Mike Zuzolo, president of Global Commodity Analytics and Consulting, told Reuters the hefty export increase was “surprising” given the U.S. dollar’s climb from its October lows. He said the beef export sales imply that the export markets are “completely insensitive” to the change in currency and speaks to how tight beef supplies are in the U.S. and globally.
“Mexico has come to the conclusion that their drought is significant enough and their feed grain prices are high enough that they don’t have the animals. Also, it probably would make a lot more sense for them to cool inflationary pressure on their meat sector by importing directly the meat and kipping trying to feed out anything that they have down there,” Zuzolo said.
Last year the U.S. exported nearly 1.3 million metric tons of beef valued at more than $5.4 billion.