BS economist talks livestock trade as Rabobank issues report

Tri State Livestock News –The Hagstrom Report January 9, 2017

PHOENIX – Both the beef and pork sectors are growing but are dependent on exports for their well-being, Karl Skold, agriculture economist for JBS, the Brazilian-owned meat company, told ranchers and farmers at the American Farm Bureau Federation convention here on Monday.

A big year-on-year beef expansion should continue at a more modest pace in 2017, which will bring production levels back up to the 2012 level, Skold said.

Lower cattle prices are making U.S. beef competitive with Brazil and Australia – where prices are even lower – even though the U.S. dollar is high, Skold said.

But the biggest issue in beef exports is the need to expand beyond Japan, Canada and Hong Kong, which are not seen as growth markets. The recent drivers have been South Korea and all other countries, he said.

The industry’s goal should be to convince people in other countries to eat one more pound of beef per year, Skold said.

Skold also said that per capita consumption over all meats, including chicken, is going up, tracking lower prices, but beef is gaining favor again with the ample supplies. The economist said that surveying retailers revealed that they had not priced steak as low in the last quarter of 2016 in six years.

“You go to the meat case and you see $5.99 steaks, you’re going to buy them,” he said. “You see $9.99, we’re going to feed the Johnsons coming over chicken.”

The pork industry has also been expanding, but the question is who is going to eat the increased supply.

Americans are willing to eat more beef, especially if prices are lower, but seem resistant to eating more than 50 pounds of pork per year.

“Consumers love bacon, ham on holidays, but to get them to eat loins is a challenge,” Skold said.

The U.S. pork industry is dependent on exports to China, Mexico and Hong Kong and needs to expand its market to other countries.

“Volatility in livestock has been dramatic,” Skold said, but conditions for the “survivors” is better, with cheaper feed costs and growing exports.

Meanwhile, Rabobank, the Dutch co-op bank, said in a report on proteins in 2017 that the market is being driven by expected increases in pork production in China and in all species in Brazil and the United States.

Skold said he expects U.S. poultry production to grow slightly, but Rabobank said it expects poultry production worldwide to decline slightly.

Rabobank also said that aquaculture is leading a “blue revolution” in protein consumption, with wild-caught supplies stable.

Rabobank supplied the report, “Prices under Pressure in a Supply-Driven Market: Rabobank’s Global Outlook for Animal Protein in 2017” to The Hagstrom Report, but did not authorize a link to it. Rabobank said it is available to Rabobank customers.