The impact of appreciation of the U.S. dollar on beef trade is twofold. In regard to exports, the relative strength of the dollar against the currencies of major trade partners has been a drag on beef shipments this year. On the flip side, the strengthening dollar has been an influence on the surge in beef imports. The strong dollar relative to other currencies has made the United States an attractive market. Furthermore, the limited availability of lean beef for processing due to low cow slaughter levels and lower overall beef production will continue to support U.S. beef imports.
In July, the United States exported nearly 200 million pounds of beef. Much of the reduction in total beef exports in 2015 can be attributed to overall lackluster demand for high-priced U.S. beef- which, on top of a strengthening dollar, makes U.S. beef even more expensive to foreign buyers. Consequently a number of key markets, including Canada and Mexico, have imported less U.S. beef than the previous year through most of 2015. In addition to the price effects on exports to Asian markets, another possible impediment to export growth in the months ahead is the potential for a slowdown in Asian economies, driven by mounting economic pressures in China. China has a ban on U.S. beef products, but other Asian nations such as Japan, Vietnam, Taiwan, Hong Kong and South Korea are destinations for U.S. beef. Additionally, in Australia, higher slaughter and beef production and record export growth this year have been unfavorable for U.S. beef exports. Given the current dynamics surrounding these exports, it is expected that they will continue to struggle through the remainder of 2015. USDA has revised third- and fourth-quarter beef export forecasts lower, bringing the annual total to 2.3 billion pounds. Regarding next year, exports should begin to recover modestly but will likely remain below 2014 levels.
Strong demand for lean processing beef amid low cow slaughter continues to support robust beef imports. In July, the United States imported around 288 million pounds of beef. The majority has been lean processing beef from Australia and New Zealand, for which both countries are now near their respective tariff rate quota limits. Imports from both Australia and New Zealand are expected to slow down in the fourth quarter as cattle slaughter rates begin to ease and traders manage exports in order to limit exposure to the above-quota duties. It is possible that some volumes of lean beef imports will be placed in bonded storage to avoid incurring additional costs. It is very likely any processed beef placed in bonded storage during late 2015 will be released in early 2016. Fresh/chilled beef imports from Mexico remain robust as July imports were reported close to 39 million pounds, 31 percent above 2014. Although the United States does not import fresh chilled or frozen beef cuts from Brazil, thermally processed beef imports from Brazil continue well above the previous year. Total annual beef imports for 2015 are projected to reach 3.4 billion pounds, while imports in 2016 are forecast to reach a little over 3.0 billion pounds.