IMF bail out of EGYPT

The IMF has just announced a bailout of the Egyptian economy entitled: A Chance for Change: IMF Agreement to Help Bring Egypt's Economy to Its Full Potential

"Political instability, regional security issues, and the global economic slowdown have negatively affected the Egyptian economy, amplifying its long-standing structural problems."

Australia's trade with Egypt is provided in the Department of Foreign Affairs and Trade fact sheet. Meat is the third most important Australian export to Egypt after wheat and vegetables. Annual trade of meat $49M, excluding beef.

Current Australian exports for the 9 months ended September by meat type and cut are shown below. The largest items currently include beef livers and beef hearts. Brazil is a major exporter, as is India with buffalo.

USA market for imported lamb

USDA released their detailed US slaughter figures . These show that US commercial sheep and lamb slaughter has trended downward since 1990. A record low commercial sheep and lamb slaughter of 2.16 million head was recorded in 2011. Since 1990, commercial sheep and lamb slaughter has declined 60 percent. Commercial average sheep and lamb live weights steadily increased from 1990 to 2000 and have leveled off since that time. A record high of 143 pounds was recorded in 2012. In 2015, commercial sheep and average live weight was 136 pounds, 11 pounds higher than 1990. This has provided an opportunity for expanded lamb imports, particularly from Australia.

For the period to Oct 21 2016, Australian lamb imports have increased 12% 42,651 tonnes. Overall USA lamb imports including New Zealand have increased 9%. Food service demand is where the Australian product shines and prices have been on a steady uptrend since the early part of 2016. The cutout below indicates potential margins of up to $70 AUD per head on heavy Australian lambs tailored for the USA market.

Grain fed manufacturing beef exports increase in face of fall in grass fed beef exports

Australian grain fed beef exports and, especially manufacturing beef, continued to increase in 2016 for the 9 months to September, compared to the same period in 2015.

Volume for the 9 months in 2016 was 38,190 tonnes compared to 34,269 tonnes in the same period of 2015. 65 chemical lean *S* cipher was the main category.

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.