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.