Update on Korean beef market

Hanwoo cattle

Statistics Korea published a Q2 report on livestock statistics which showed that Korean native and beef cattle numbers rose 0.6% to 2,742 thousand head, compared to the same quarter in 2015.

Trends in Korean livestock numbers  - Statistics Korea

While cattle numbers have edged higher the longer term trend is that beef production is not keeping pace with consumption.

Statistics Korea report that although costs of production of domestic Korean cattle have eased, imports from Australia, USA and New Zealand will be of great importance to the Korean local beef supply availability.

KITA figures show fresh, chilled and frozen beef import values jumped 13.2% in August 2016 compared to August 2015. 37,061 tonnes total beef imports were recorded for the month of August 2016 and year to date imports are already 248,205 tonnes for the calendar year to August. Year to date average unit value is US$5.68 per kg. and August import unit value for beef imports was US$5.66 per kg. 

The latest USDA FAS Korean livestock report predicts that Korean cattle numbers will likely be unable to hold at current levels due to uncertainty about prices and costs. The USDA forecast the Korean calf crop will go into its third straight year of decline in 2017. Lower US beef prices as well as a lower duty rate will assist US beef exports to increase their share of the market. The same report notes the USA duty will be  24%, compared to 29.3% for Australia and 32% for Canada in 2017. Australia shipped 113,904 tonnes in the year to August 2016 compared to 105,845 tonnes for the same period last year.

American Protein Power

Cheap grain, large integrated processors, a huge home market and relatively weak currency - all the ingredients for a rebound in exports and sharply improved competitive position.

The latest weekly USMEF  report noted that beef exports were 17,400 tonnes, a marketing year high and the highest since 2012. Very low US grain prices and vastly more competitive beef export prices have driven aggressive expansion in all markets, some with high double digit growth such as Japan, Hong Kong, Mexico, Canada and Taiwan. Lower Australian prices have allowed Australia to hold its market share in Korea.
The USDA AMS weekly livestock, poultry and grain market highlights shows pork prices are down a further 7.2% from a low base and heavily depressed US cattle prices have seen the 5 area value fall to 24.5% less than last year at $105.02 per 100lb liveweight. Year to date pork production is even but beef production is up 4.8%. USA wheat prices are sharply lower and corn and sorghum prices are around 11-15% down on last year. Commentators in USA have noted that cheaper grain certainly helps the USA to power its intensive protein industries but producers are not enjoying the very low returns. The ever expanding poultry production, up a further 2.3% year to date, has seen national whole broiler chicken prices maintain last years level of just over US80 cents per lb, well below the 5 year average price recorded by USDA.

USDA AMS report  Japan beef imports increasing a modest 1% year to date but USA share has risen sharply by 20%, with Australia sagging 7%. USDA also show the USA making great strides in exports to Korea, but the overall market has been growing as distinct from a deflationary environment continuing in Japan. No doubt low priced USA pork is helping to drive growth in USA market share in the Japanese market but the growth in China is a hugely impressive 185% year to date lift for American pork. 

Spectacular price competitiveness of USA beef in Japan is highlighted by reports of the Japanese Meat Trading Center charts for 3 year price trends for the most popular US beef items, chilled and frozen beef short plate and chuck eye roll.

Chilled and frozen short plate. US chilled short plate prices in September are down 36% from the peak levels at Y711 per kg. US frozen short plate prices are currently Y635 per kg, down from earlier in 2016 and down a whopping 40% from the peak levels.

Latest USDA ERS forecasts indicate a 13% lift in beef exports in 2017 compared to full year 2015. US pork exports are well over double US beef exports and 2017 is forecast at 5,300 million lbs, up 6% on full year 2015 or 291 million lbs (132,000 tonnes). Even more impressive, is that USDA ERS forecast total USA red meat and poultry production will reach 100,241 million lbs in 2017, compared to their estimate for 2016 of 97,552 million lbs in 2016 and 94,630 million lbs in the last full year of 2015. Going past 100,000 million lbs of red meat and poultry production will provide a mega total of 217.6 lbs per capita consumption in 2017. While a few advertising insiders get their rocks off at expensive award events in Australia, the USA protein sector is a massive engine with the resources to blast high cost producers like Australia off the competitive map.

Korean officials receive Brazilian trade delegation with an eye to beef exports

Brazilian minister targets Korean market for meat with initial success with Brazilian pork. It is expected that once Korean officials visit Brazilian pork processors, trade could commence in early 2017. In addition, the Brazilian are pushing hard for admission of Brazilian beef as noted by the trade association. "But the Minister Blairo asked the Korean government immediately initiate the process of approving the importation of Brazilian beef. He recalled that Brazil has just received approval from the US government, and is a traditional supplier of the European Union, which are among the most demanding markets in the world." KITA trade statistics indicate Korean fresh and frozen beef imports are running strongly in 2016 with increases in US$ value ranging from 13-17% higher than the same months in 2015 for June, July 2016.

Korea imported 620,000 tonnes of pork in 2016 and so far in 2016, pork imports total 372,000 tonnes. Korea imported 295,000 tonnes of beef in 2015 and so far in 2016, the rate of import has increased rapidly to 211,000 tonnes for only 6 months.

Global pork producers, importers and exports - a Brazilian perspective

Brazilian Association of Animal Production represents both pork and chicken processors and exporters.

While China leads pork production, EU follows and the EU is also a major pork exporter. Japan is the leading global importer of pork followed by the rapidly growing China market. USA is the largest pork exporter.

Middle East sheep and goat numbers

Data collected and published in the Arab Agricultural Statistics Yearbook 2014 is the latest data available and the combined group of countries have
 91 million goats and 184 million sheep.

This compares with ABS statistics for Australia published in Dec 2015 which showed Australia had a sheep and lamb population of just under 70 million head. "Sheep and lamb numbers continued to decline due to dry seasonal conditions across eastern Australia and increased slaughtering rates. Total sheep and lamb numbers dropped by 4 per cent from 2013-14 down to 70 million head. NSW had the greatest number of sheep and lambs on holding, with 26 million head followed by Victoria with 14 million head."

Canada sheep and lambs update.

According to USDA recent data, as of July 1, 2015, Canada’s total sheep and lamb herd equaled 1.04 million head. This was down 2.8 percent from one year ago and was down 5.3 percent from two years ago.
Alberta Lamb

The largest concentration of Canada’s sheep herd was in the province of Ontario with 321,000 head, or 30.8 percent of the total. This was 2.5 percent lower than one year ago. The province with the second greatest number of sheep was Quebec with 240,000 head, or 23.0 percent. This was 4.0 percent less than the previous year. During the first half of 2016, Canada’s sheep slaughter totaled 90,088 head, which was 14.7 percent higher than one year ago and was 8.0 percent higher than two years ago. http://www.statcan.gc.ca
Canada has supplied only 39 tonnes of lamb to USA in 2016. Other small suppliers are Iceland 360 tonnes, Chile 139 tonnes. The USA market is dominated by Australia with imports of 31110 tonnes of lamb in 2016, a solid 18% increase, year to date. New Zealand has supplied 14,424 tonnes up 6% year to date. Australia exported 4,017 tonnes to Canada in the year ended June 2016, slightly down on the 2015 figures with more going to the East Coast Canada in 2016 and lower volumes to the Canadian western states.

Columbia resumes import of USA cattle

After 13 years the Colombian Agricultural Institute, ICA, closed the importation of cattle from the United States to Colombia, entered the first 19 head  from that country to contribute to the genetic improvement of livestock Colombia.
Columbia imports US cattle