Livestock market analysts are watching a variety of international issues for their impact on cattle markets, including the beginning of tariff reductions in Japan and the fires in Australia.
Andrew Griffith, ag economist with the University of Tennessee, says the beef import and export quantities for November were released the first full week of January, and they could mark the beginning of a lot of movement for markets.
“Beef and veal exports for November totaled 244.56 million pounds on a carcass weight basis,” he says. “This is a decline of about 4 million pounds compared to October and 21.4 million pounds less than November 2018.”
Import numbers also showed some changes.
“On the import side, the United States imported 242.07 million pounds of beef in November, which is 1.2 million more pounds than October and nearly 25 million more pounds than November 2018,” Griffith says. “These value changes seem like a lot of moving and shaking, but this market is just beginning to be moved.”
The Japanese tariff reductions for U.S. beef began Jan. 1, and Griffith says that could have long-term impacts on exports.
“As of Jan. 1, the tariff rate on U.S. beef exported to Japan declined from 38.5% to 26.6% with the enactment of the most recent trade agreement,” he says.
“This reduction in the tariff rate makes the U.S. more competitive with Australia as both countries will face the same declining tariff rate over the next several years.”
In the shorter term, Griffith says the fires in Australia have impacted beef production and could mean more beef from the U.S. will be needed at overseas markets.
“Another factor that should support exports of U.S. beef to Japan is the fires in Australia,” he says. “Beef production there has been terribly disrupted, and U.S. beef can fill the void.”
Griffith says the futures market has strength right now, but there are still unknowns. He says there could be a boost coming based on the supply and demand factors.
“For producers with cows that need to be marketed as slaughter cows, the advice is to keep holding them for now,” he says. “The market should receive a strong boost in February or early March before starting a slower grind higher. Late February or March may be a good time to offload those cows that need to exit the breeding herd.”