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USMEF “New Cuts” Seminar. Carcass Utilization: The “New” Japan Market. Brett Stuart Director of Trade Analysis Omaha, Nebraska November 29, 2005. BSE Impact on Japan Beef Market. Eating less, yet paying more Losers: N. America, domestic industry. Source: ALIC, USMEF.

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USMEF “New Cuts” Seminar

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Usmef new cuts seminar

USMEF “New Cuts” Seminar

Carcass Utilization:

The “New” Japan Market

Brett Stuart

Director of Trade Analysis

Omaha, Nebraska

November 29, 2005


Bse impact on japan beef market

BSE Impact on Japan Beef Market

  • Eating less, yet paying more

  • Losers: N. America, domestic industry

Source: ALIC, USMEF


Bse impact on japan market

BSE Impact on Japan Market

Japan BSE 9/01

US BSE 12/03

  • BSE was a major impact to U.S. beef …


Bse impact on japan market1

BSE Impact on Japan Market

… but not to Japanese meat supplies


Cuts analysis

Cuts Analysis


U s beef cuts to japan

U.S. Beef Cuts to Japan

“Methodology and Results of the Value of Beef Exports Analysis, USMEF, 2002


U s beef to japan cuts

U.S. Beef to Japan - Cuts

These 7 cuts only represent 15% (87 pounds) of red meat per carcass

USMEF Estimates


Eligible cattle supplies 2006

Eligible Cattle Supplies - 2006


U s supplies

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 inmind: ONLY 2.4% of U.S. beef production was exported to Japan in 2003

    -- Cuts are KEY! --


Available cattle impact on cuts

Available Cattle: Impact on Cuts

Example:


U s beef to japan cuts1

U.S. Beef to Japan - Cuts

20%

15%

USMEF Estimates


New cuts

“New” Cuts


New cuts1

“New” Cuts

USMEF Estimates


Potential available supplies

‘Potential’ Available Supplies

Source: Cattle-Fax, USMEF


New cuts2

“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

Current Prices

Source: USDA, ALIC, USMEF; US price includes frt and 38.5% duty


Japan beef prices

Japan Beef Prices

$0.92

Source: ALIC, Trader’s Price


Cut prices

Cut Prices

The question to ask yourself is: “What will short plates, tongues, etc, be worth when the market opens?”

Flap

Shoulder clod, Ball tip, knuckle

Brisket

Source: USDA, USMEF


What about demand

What About Demand?

  • 3rd 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

Demand Points to Consider

  • Similar results in 2001 survey

  • 26% of 122* million= 31.7 million consumers

  • Foodservice beef is not labeled country of origin; US beef is used widely in foodservice

  • Australian beef has been high-priced

  • Domestic beef remains very high-priced

  • Retail sales will likely be most difficult to recover

  • 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

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 bstuart@usmef org

For more information:

www.usmef.org

Brett Stuart

[email protected]


Potential available supplies1

‘Potential’ Available Supplies

Source: Cattle-Fax, USDA, USMEF


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