The beef business: Optimism looking toward 2012
Are you optimistic about the beef cattle business as we ended 2011 and begin looking toward 2012? Prices are high across all segments of the cattle industry, demand for beef remains strong and we still do not see expansion in the cattle herd. There is a general consensus that beef cattle prices should be good through the foreseeable future. It is important to understand that the demand for beef that drives prices comes from both domestic and international demand. I recently read some interesting facts about international markets and U.S. beef exports that I will share.
Through the first three quarters of 2011, beef exports accounted for 10.7 percent of total U.S. beef production. Those exports are spread around a number of nations. While the bulk of our beef exports are made into Mexico, Canada, Japan and South Korea, there are other markets that are growing. For example, the fastest growing export market for U.S. beef in 2011 has been Russia, with an increase of more than 80 percent compared to last year. Also growing are the markets for U.S. beef in Hong Kong, Taiwan, and Vietnam. The benefits of multiple market outlets are two-fold. First, different countries and different areas of the world provide opportunities to market the various cuts and qualities of beef. Every customer has different preferences or different market niches that they fill. Second, more market outlets help to reduce risks that are inherent in export trade. It is the old adage of: “Don’t place all your eggs in one basket.”
Another factor that can’t be overlooked in accounting for the strong beef export markets is the relative strength or weakness of the U.S. dollar. According to Darrell Peel, a livestock marketing specialist with Oklahoma State University Extension, it is the weakness of the U.S. dollar relative to the Australian and Canada dollar that is helping to drive the strong export market.
I believe that there is reason for optimism in the beef cattle business. Change is ahead, but cattlemen who study those changes, adapt with the needs of the market, and focus on low cost production will be presented with opportunities for profit. Plan to learn more about those opportunities by attending the 2012 Ohio Beef School beginning Jan. 26 at many Ohio County Extension offices.
Through the first three quarters of 2011, beef exports accounted for 10.7 percent of total U.S. beef production. Those exports are spread around a number of nations. While the bulk of our beef exports are made into Mexico, Canada, Japan and South Korea, there are other markets that are growing. For example, the fastest growing export market for U.S. beef in 2011 has been Russia, with an increase of more than 80 percent compared to last year. Also growing are the markets for U.S. beef in Hong Kong, Taiwan, and Vietnam. The benefits of multiple market outlets are two-fold. First, different countries and different areas of the world provide opportunities to market the various cuts and qualities of beef. Every customer has different preferences or different market niches that they fill. Second, more market outlets help to reduce risks that are inherent in export trade. It is the old adage of: “Don’t place all your eggs in one basket.”
Another factor that can’t be overlooked in accounting for the strong beef export markets is the relative strength or weakness of the U.S. dollar. According to Darrell Peel, a livestock marketing specialist with Oklahoma State University Extension, it is the weakness of the U.S. dollar relative to the Australian and Canada dollar that is helping to drive the strong export market.
I believe that there is reason for optimism in the beef cattle business. Change is ahead, but cattlemen who study those changes, adapt with the needs of the market, and focus on low cost production will be presented with opportunities for profit. Plan to learn more about those opportunities by attending the 2012 Ohio Beef School beginning Jan. 26 at many Ohio County Extension offices.
Published: January 4, 2012
