Sept. 12, 2016
International trade role looms larger for cattle and beef markets
by Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
Markets work best and most efficiently not by stopping and starting abruptly but by gently tapping the brakes or the accelerator as conditions change. International trade of cattle and beef is a significant buffer that reduces drastic market swings in U.S. markets. In 2014 and 2015, record high U.S. prices, reduced supplies had the expected effect of stimulating beef imports and cattle imports while retarding beef exports. A strong U.S. dollar exaggerated those effects both ways. Increased beef imports augmented supplies of beef, especially supplies of lean processing beef (primarily for ground beef) and moderated what would have been an even more extreme impact on domestic demand in a period of record prices. Beef exports decreased as record high prices rationed demand in both the domestic and international markets.
Increased beef production and lower prices in 2016 is reversing those impacts. Beef exports are recovering, albeit rather slowly and unevenly. July beef exports were up 8 percent to all destinations. Year to date beef exports are up 3.1 percent with year over year increases to Japan, Mexico and South Korea. Exports to Canada and Hong Kong are still down year over year though Hong Kong posted a year over year increase for the month of July. The dollar has moderated against several currencies, the Japanese Yen in particular, but still represents a headwind for beef exports.
Beef imports were down 6.8 percent for the month of July with the year to date total down 12.1 percent. Imports from Australia have been down sharply every month this year and are down 31.2 percent for the first seven months this year. Beef imports from Australia increased the most the past two years as record high U.S. prices coincided with drought forced liquidation in Australia that increased short run beef production. Imports have also decreased from Brazil for the latest monthly data and for the year to date. Other beef import flows are in flux with Mexico down in July but still up for the year to date. By contrast New Zealand, Nicaragua, and Uruguay were all up in July but are still down for the year.
Beyond short term market conditions, trade flows are impacted by longer term conditions in various countries and structural changes that alter the long term trajectory of beef and cattle trade flows. For example, China has emerged as the second largest beef importer in recent years as consumption exceeds beef production; making China a global beef market participant for the first time. The U.S. does not yet have direct access to the Chinese market but the impacts are already evident in global markets and are expected to continue to grow. Closer to home, Mexico’s growth in beef production and processing and growing exports has a number of direct impacts on the U.S. market. In 2015, roughly 90 percent of Mexican beef imports moved to the U.S. making Mexico the fourth largest source of beef imports in the U.S. At the same time, increased demand for Mexican cattle in Mexico is reducing the flow of Mexican feeder cattle to the U.S. Cattle imports from Mexico were down 54.1 percent year over year in July and are down 20.9 percent for the year date. This is likely a permanent or at least, long-lived decrease in Mexican cattle exports.
Decreased beef imports and growing beef exports will play a central role in stabilizing cattle and beef prices in the U.S. as production expands in the coming years. Along with domestic beef demand, international demand for U.S. beef will determine just how big the U.S. beef industry needs to be as it grows. More than just total tonnage, beef exports and imports are critical in balancing the supply and demand of specific beef products. This helps maximize the value of every beef carcass in the U.S. market.
Are the replacement heifers ready for the fall breeding season?
by Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Fall-calving herds will be breeding replacement heifers in late November. Now is the time to make certain that those heifers are ready for the upcoming breeding season.
Immunize the heifers. Ask your large animal veterinarian about proper immunizations for yearling replacement heifers. Replacement heifers should be immunized for respiratory diseases such as IBR and BVD. Consider giving the heifers a modified live vaccine for longer lasting protection against these viruses.The heifers should receive this vaccination at least one month before the start of the breeding season. This would also be a good time to include other reproductive disease protection that may be recommended by your veterinarian. Examples of other immunizations that should be considered include leptospirosis and campylobacter, sometimes called vibriosis.
If a set of scales is available, weigh the heifers. There is time to make adjustments to the supplementation being fed to the heifers to insure that they meet the target weight at the start of the breeding season. To be certain that a high percentage of heifers are cycling at the start of the breeding season, they must weigh a minimum of 60 percent of their mature weight (Davis and Wettemann). See OSU Research Report 2009. If these heifers will eventually grow into 1200 pound cows, then they must weigh 720 at the beginning of the estrous synchronization and artificial insemination (or bull turn-out if natural breeding is used). Calculate the weight gain needed between now and the start of the breeding season to see if additional energy is required to achieve the desired weight gain.
Many small cow calf operations will not have scales available to monitor weight gain. The next best evaluation tool is to monitor body condition of the heifers. If all of the heifers are in a body condition score of 6 (based on the 1 to 9 BCS system) then they should meet the desired target weight.
Sept. 12, 2016