U.S. Supplies? A-40 Maturity –USDA Estimated at 7.7% of U.S. slaughter –Could be much lower Source Verified – documentation –Estimates range from 15-30% QSA Approved? _____ (fill in the blank) % of steer/heifer slaughter? Seasonality Keep in mind: ONLY 2.4% of U.S. beef production was exported to Japan in 2003 -- Cuts are KEY! --
“New Cuts” The majority of U.S. production of these new cuts will not be used for Japan However, they do provide opportunities to enhance value on underutilized cuts and expand supplies for Japan What about prices?
Current Prices 11/05 U.S. wholesale ( +tariff,frt) 9/05 Japan Imports Aus/N.Z. Japan Import $ as a % of U.S. $ Full Set – short fed $2.29 cutout $3.32145% Loin $3.21 $4.27133% Chuck, Round $1.91 $2.16113% Ribs $1.93 $2.07108% Chuck Roll $2.73 $2.81103% Brisket - flat $3.34 $2.9990% Striploin $6.70 $4.8973% Topside $2.62 $2.2787% Source: USDA, ALIC, USMEF; US price includes frt and 38.5% duty
Japan Beef Prices Source: ALIC, Trader’s Price $0.92
Cut Prices Brisket Shoulder clod, Ball tip, knuckle Source: USDA, USMEF Flap The question to ask yourself is: “What will short plates, tongues, etc, be worth when the market opens?”
What About Demand? 3 rd Quarter 2005 Survey –Diet and price are most common reasons for eating less beef –Significantly fewer referring to BSE as cause for eating less beef USMEF, Ipsos
Demand Points to Consider 1.Similar results in 2001 survey 2.26% of 122* million= 31.7 million consumers 3.Foodservice beef is not labeled country of origin; US beef is used widely in foodservice 4.Australian beef has been high-priced 5.Domestic beef remains very high-priced 6.Retail sales will likely be most difficult to recover 7.Two years of negative press about US beef USMEF Estimate: 4-5 years to recover to 2003 levels * 127 million total population in 2005, 4% vegetarian
Summary Japan is hugely significant to the industry Traditionally, the U.S. has sent a few cuts from a lot of cattle, to Japan; supply of these cuts will be severely limited Demand for some segments will recover quickly, overall demand will take years to recover “New” cuts provide an opportunity to enhance supplies and profits
For more information: www.usmef.org Brett Stuart firstname.lastname@example.org
‘Potential’ Available Supplies 20032006 Eligible Cattle28.0 million4.8 million Key cuts exported (lbs/hd)87212 Supply potential (mt)1,104,000461,497 Total exports to Japan (mt)375,45591,600 Qualified Supply Exported34%20% Source: Cattle-Fax, USDA, USMEF
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