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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. 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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  1. USMEF “New Cuts” Seminar Carcass Utilization: The “New” Japan Market Brett Stuart Director of Trade Analysis Omaha, Nebraska November 29, 2005

  2. BSE Impact on Japan Beef Market • Eating less, yet paying more • Losers: N. America, domestic industry Source: ALIC, USMEF

  3. BSE Impact on Japan Market Japan BSE 9/01 US BSE 12/03 • BSE was a major impact to U.S. beef …

  4. BSE Impact on Japan Market … but not to Japanese meat supplies

  5. Cuts Analysis

  6. U.S. Beef Cuts to Japan “Methodology and Results of the Value of Beef Exports Analysis, USMEF, 2002

  7. U.S. Beef to Japan - Cuts These 7 cuts only represent 15% (87 pounds) of red meat per carcass USMEF Estimates

  8. Eligible Cattle Supplies - 2006

  9. 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! --

  10. Available Cattle: Impact on Cuts Example:

  11. U.S. Beef to Japan - Cuts 20% 15% USMEF Estimates

  12. “New” Cuts

  13. “New” Cuts USMEF Estimates

  14. ‘Potential’ Available Supplies Source: Cattle-Fax, USMEF

  15. “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?

  16. Current Prices Source: USDA, ALIC, USMEF; US price includes frt and 38.5% duty

  17. Japan Beef Prices $0.92 Source: ALIC, Trader’s Price

  18. 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

  19. 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

  20. 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

  21. 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

  22. For more information: www.usmef.org Brett Stuart bstuart@usmef.org

  23. ‘Potential’ Available Supplies Source: Cattle-Fax, USDA, USMEF

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