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AHDB European Market Survey

27 February 2012

AHDB European Market Survey - 24 February 2012AHDB European Market Survey - 24 February 2012

In 2011, US fresh and frozen beef exports were 22 per cent higher than a year earlier.


Dramatic increase in US pork and beef exports

In 2011, US fresh and frozen beef exports were 22 per cent higher than a year earlier. After a slight decrease in 2010, fresh and frozen pork exports increased by 25 per cent. During 2011, the US dollar was relatively weak compared with many currencies, improving the competitiveness of US beef and pork in export markets.

The growth in beef exports was primarily due to increased shipments to Japan, South Korea and Canada, each of which recorded increases of around a third. This was supported by increases to the smaller markets of Russia, Hong Kong and Vietnam. Local production in Japan contracted in 2011 due to a combination of livestock losses and disruption to markets following the tsunami, which lead to increased demand for imported beef. The low value of the US dollar compared with the Japanese yen contributed to the significant increase in shipments.

USDA forecasts that the South Korean outbreak of foot and mouth disease (FMD) in 2010 would lead to stronger growth in US beef exports to the region in 2011 were fulfilled. Higher pork prices in South Korea as a result of the culling of infected pigs have encouraged consumers to switch to other protein sources such as beef. The US Congress has recently approved a free trade agreement with South Korea. Exports of beef to Russia, although historically small, increased significantly to 47,000 tonnes.

During the first half of 2011, South Korea imported more US beef than Mexico. However for the year as a whole, Mexico remained the leading destination for US beef exports despite a two per cent year on year decrease due to Mexico’s slow recovery from the economic crisis. The USDA forecasts that as beef inventories continue to decline and cow slaughter diminishes, beef production will decline in 2012 which could affect export availability. Nevertheless, export volumes are expected to remain high.

For fresh and frozen pork, increased shipments to Asian markets were the key driver of the growth in export volumes. Japan remained the primary market for US pork with shipments increasing by 19 per cent compared with 2010. Following the relaxation of Chinese import restrictions related to A-H1N1 and with rising Chinese prices, shipments to China grew dramatically, accounting for over half of the growth in US pork exports. This made China the third largest export market for US pork.

Shipments to South Korea also increased dramatically in the wake of the FMD outbreak. Volumes sent to Canada, Russia and Australia also increased. This more than offset a 38 per cent (22,500 tonnes) decrease in exports to Hong Kong due to the Chinese government’s new policy regarding product re-exported to China via Hong Kong.

The USDA forecasts indicate that pork exports will continue to increase during the first half of 2012. Shipments to Asia and other North American countries are expected to be particularly strong as the persistently weak US dollar drives up export demand.

Decline in French cattle numbers

According to data from Eurostat, cattle numbers in France in November 2011 were down three per cent on the previous year. This followed a two per cent increase in numbers between 2009 and 2010. Adult cattle slaughterings were up four per cent between January and November 2011 compared with the previous year, entirely due to increased slaughterings of female cattle.

Dairy and beef cow numbers were down one per cent and two per cent respectively on the year. Total cow slaughterings in January to November 2011 were up nine per cent on the same period in 2010, mainly because of culling of beef cows as a result of the drought in the spring and lower profitability. The number of heifer replacements aged over two years was down around seven per cent on the year, suggesting a further decline in cow numbers in 2012. Assuming better grazing conditions this year, female beef production is forecast to decline by five per cent in 2012 according to the Institut de l’Elevage after an estimated increase of six per cent in 2011.

The number of calves for slaughter in November 2011 fell two per cent on November 2010, as did total calf numbers. Calf slaughterings in January to November 2011 were down around two per cent on the year, as consumer demand for veal was weak. The situation was not helped by higher retail prices and veal finishers cut back on their throughput.

The number of cattle aged between one and two years was down two per cent on the year. Male cattle numbers were down four per cent indicating that a downturn in male cattle slaughterings can be anticipated in the first half of 2012. As a result male beef production for 2012 as a whole is forecast to fall by as much as six per cent after an estimated reduction of two per cent in 2011.

In January to November 2011, exports of live cattle weighing between 161 and 300kg and males over 300kg were up on the year, which will have contributed to the lower numbers on farm in November. Total live cattle exports were up 11 per cent on the year to 1.4 million head, driven by growth in shipments to the two largest markets of Italy and Spain and a sharp increase in trade with Algeria. The opening up of access to Turkey in September also contributed to the flow of exports. In contrast, shipments of live animals to Belgium and Greece fell on the year.

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