The drought that stretched across much of the U.S. this summer decimated corn and soybean crops, with the U.S. Department of Agriculture estimating the corn harvest will be 13 percent smaller than in 2011.
Corn exports for the year beginning Oct. 1 will drop from 39 million metric tons to 33.5 million, and soybeans will decline from 37.3 million metric tons to 30.2 million, according to new USDA estimates. Increasing amounts of grain have been shipped in containers, which should leave a lot of empty box slots on vessels during the next 12 months.
But by and large, the drought hasn’t affected fresh fruit and vegetable crops traditionally exported in refrigerated boxes.
The high feed grain prices are expected to affect imports and exports of red meat and poultry as domestic production of beef, pork and chicken is expected to fall amid rising prices.
Despite the price hike, overall meat and poultry exports will decline only slightly, according to an August trade outlook estimate released by the USDA. Beef exports are expected to climb 100,000 metric tons to 1.9 million, pork exports are forecast to remain unchanged at 800,000, and foreign sales of chicken broiler meat are estimated to decline 200,000 metric tons to 3.1 million.
The pricing pressure is expected to affect import volumes as well. The USDA said in its outlook report it expects beef imports to climb about 12.5 percent to 900,000 metric tons. Pork imports are expected to jump 33 percent to 400,000 metric tons.
The USDA doesn’t break out estimates for lamb imports, but industry groups expect them to be in line with or slightly higher than in recent years. The U.S. imported about 59,000 metric tons of lamb in 2011 — 47 percent of the total U.S. lamb supply. Over the past decade, imports frequently amount to more than 50 percent of the total supply. Virtually all lamb imports come from Australia, 65 percent, and New Zealand, 35 percent.
“We are expecting higher import levels of beef and pork next year, but that’s something we’re already seeing,” said Laurie Bryant, executive director of the Meat Importers Council of America.
Meat imports dropped significantly in the last two years, he said, especially from Australia. That decrease wasn’t about U.S. demand slowing, but more the global economic situation. “The drought will be one factor that affects imports next year, definitely, but imports have been lower than normal because of a combination of a lower dollar and strong demand in other markets,” Bryant said.
“The dollar is stronger, and meat prices are up here, and together it makes the U.S. market more attractive to beef producers in Australia, Uruguay and New Zealand,” he said.
The U.S. market places expensive demands on imports that don’t exist in other markets, such as testing for e-coli.
“If prices go higher here, it will make this a more competitive market, but that also depends on the strength of the dollar and demand elsewhere,” Bryant said.
He said 70 percent of imported meat is destined for manufacturing, going into hamburgers and hot dogs and sold to fast-food chains. The remaining meat imports are specialty and niche items. “Round cuts of pastrami tend to be a product that is imported. The family restaurant and deli sectors use some specialty meats,” he said.
Halal meats, organic products and some specialty meats are at the high end of prices, unlike other imports, Bryant said. “Tariffs on beef imports are low, but the requirements to manage testing regimes to meet the demands of consumers and to trace product so that an importer can limit the extent of a recall in the case of e-coli are costly,” he said.
Bryant said it is clear that prices in the U.S. will be stronger next year, but other markets are uncertain. “Other than the USDA estimates, it’s hard for us to forecast,” he said.
Beef producers in two nations are trying to re-enter the U.S. market. Argentina lodged a complaint against U.S. import restrictions at the World Trade Organization at the end of August. The U.S. banned Argentine beef, the world’s third-largest exporter of beef after Brazil and Australia, from the U.S. market for several years because of the presence of foot-and-mouth disease in the country’s cattle herd.
In its filing at the WTO, Argentina said protectionism, not science, was behind the U.S. ban, a charge the U.S. Trade Representative’s Office denied. In 2011, the USTR said, U.S. imports of agricultural products from Argentina exceeded $1.6 billion. U.S. agricultural exports to Argentina that year totaled $153 million.
Japanese beef has been banned from the U.S. since 2010, also because of an outbreak of foot-and-mouth disease. But U.S. agriculture officials seem satisfied that the outbreak has been contained, and the high-value beef began entering the country in mid-August, with Kobe beef heading to upscale restaurant menus.
Contact Stephanie Nall at email@example.com.