Production:

The New Post 2015 Mexican beef production forecast is revised up to 1.828 million metric tons (MMT) carcass weight equivalent (CWE), 4 percent above the 2015 USDA official production estimate. Post also boosted our 2015 slaughter forecast, based on year to date slaughter data trends and information from sources indicating expectations for slaughter rates roughly in line with last year. Recently, private sources confirmed that during 2013, the weight of cattle sent to slaughter was near 450 kilograms while by the end of 2014, the average weight of cattle increased to 520 kilograms at high-end feedlots. These higher weights are expected to be maintained during the current year. Continued strong feeder cattle exports to the United States of America mean limited fed cattle available for slaughter domestically, keeping our slaughter forecast from rising even higher. In northern Mexico, feed lot programs are continuing to grow as international grain prices continue to be attractive and should keep production costs in check, at least during the first half of 2015.

Post's 2014 beef production estimate was revised upward for many of the same reasons listed above, specifically the availability of cheaper grains and increased weight gains and carcass yields. Sources indicate that the plan to repopulate the cattle herd, which has been in place since 2013, is expected to have contributed very little to 2014 production but will contribute more significantly in 2015. Stronger effects are anticipated for the following year. Post's 2013 production estimate is revised slightly down based on official information from SENASICA-SAGARPA.

The New Post 2015 cattle import number is 35,000 head, down from the 2015 USDA official forecast, given increased prices of live cattle in the United States. Historically, cattle are imported for reproduction purposes (which typically contain improved genetics that eventually benefit breeding and feeding purposes in farms). During 2015, despite the lower forecast, these imports should lead to improved calf production birth rates. This is a mid-long term objective to achieve for the cattle sector. Post's cattle imports for 2014 were revised downward, mainly, due to increased prices and limited inventories in the U.S.

Although private and public efforts towards cattle herd repopulation continue, producers continue seeing high prices for feeders and fed cattle, a near-term disincentive for the overall industry to retain substantially higher breed stock. According to industry sources, Mexico's export of live cattle will continue to be strong due to attractive, though stabilizing prices —down from their second half 2014 highs—in the United States. With these moderating prices, Post lowered slightly the 2015 forecast for cattle exports, to 1.2 million head, and also reduced the estimate for 2014 to 1,116 million head, based on available data.

Although cattle ending inventories in 2015 are revised marginally up compared to 2015 USDA official figures, they are still down from the Post revised 2014 levels. The Post 2014 ending inventories estimate moved marginally higher from the USDA official, due to reduced exports, to 17.184 million head. Although still declining, we now see that the rates of decline in Mexico's cattle herd has moderated, paving the way for future rebuilding.

Consumption:

The New Post 2015 domestic total beef consumption estimate is revised upward to 1.848 MMT, which is 2 percent higher than the 2015 USDA official estimate. Despite high beef prices that continue to constrain consumption among low-medium income consumers, Mexico's growth trends, both economic and population, continue to boost overall demand.

Despite higher forecast total supply and consumption, the 2015 forecast consumption level suggests that per capita consumption will continue stable to lower at between 15 and 16 kilograms per person. Sources have indicated that during the past three years, per capita consumption dropped from 17 kilograms to 15 kilograms but suggest that beef consumption will rebound in 3-4 years.

In late 2014 and early 2015, 60 percent of the meat consumed in Mexico was processed in a TIF-type establishment (up from around 50 percent a year earlier) and distributed in chain stores or supermarkets at more affordable prices than in traditional butcher houses. Increasingly, it seems, consumers are becoming aware of the food safety benefits that TIF establishments offer as well as the established retail and hypermarkets that these TIF establishments supply. This will support per capita consumption in the mid-term.

Trade:

The New Post forecast lowers Mexico's 2015 beef imports compared to the 2015 USDA official figures, given the expected situation in the United States of increased beef prices due to the ongoing process of recovering the domestic herd. Despite these trends, however, we now forecast 2015 beef imports higher than our revised 2014 beef import estimate. As noted above, Mexico's economic and population trends are expected to overcome the headwinds of prices and availability, supporting imports at a higher level this year compared to last year. The New Post 2014 beef import estimate is revised down based on trade data to date. Again, limited supplies and higher prices from the United States reduced demand more than forecast, especially given the above mentioned higher than expected domestic production level. 2013 import estimates remain unchanged.

The improved quality, food safety, and sophistication of Mexican beef operations have opened doors for increased and targeted Mexican beef exports over the past several years. The New Post 2015 Mexican beef export forecast is revised up to 200,000 MT CWE. This is due to the opening of a new Asian market niche (Hong Kong), which the Mexican industry believes represents a 50,000 MT CWE export opportunity. Although Post believes this to be an optimistic viewpoint, we none the less agree that Mexico will see higher exports to this destination. Despite struggles with access to the Russian market (closed due to concerns over β-agonist use), the 2014 export estimate is revised upward based on available trade data, which shows exports were larger than expected to the U.S.

Animal Numbers, Cattle

Mexico

2013

2014

2015

Market Begin YearJan 2013

Market Begin YearJan 2014

Market Begin YearJan 2015

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Total Cattle Beg. Stocks

18,521

18,521

17,760

17,760

17,175

17,184

Dairy Cows Beg. Stocks

3,200

3,200

3,215

3,215

3,250

3,250

Beef Cows Beg. Stocks

6,750

6,750

6,700

6,700

6,700

6,700

Production (Calf Crop)

6,700

6,700

6,750

6,750

6,825

6,825

Total Imports

30

30

35

32

45

35

Total Supply

25,251

25,251

24,545

24,542

24,045

24,044

Total Exports

1,045

1,045

1,125

1,116

1,225

1,200

Cow Slaughter

1,450

1,450

1,400

1,400

1,400

1,400

Calf Slaughter

300

300

300

300

300

300

Other Slaughter

4,450

4,450

4,300

4,300

4,275

4,300

Total Slaughter

6,200

6,200

6,000

6,000

5,975

6,000

Loss

246

246

245

242

245

230

Ending Inventories

17,760

17,760

17,175

17,184

16,600

16,614

Total Distribution

25,251

25,251

24,545

24,542

24,045

24,044

1000 HEAD, PERCENT

Meat, Beef and Veal Mexico

2013

2014

2015

Market Begin YearJan 2013

Market Begin YearJan 2014

Market Begin YearJan 2015

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Slaughter (Reference)

6,200

6,200

6,000

6,000

5,975

6,000

Beginning Stocks

0

0

0

0

0

0

Production

1,808

1,807

1,760

1,827

1,765

1,828

Total Imports

232

232

235

209

230

220

Total Supply

2,040

2,039

1,995

2,036

1,995

2048

Total Exports

166

166

180

190

185

200

Human Dom. Consumption

1,864

1,863

1,805

1,836

1,800

1,838

Other Use, Losses

10

10

10

10

10

10

Total Dom. Consumption

1,874

1,873

1,815

1,846

1,810

1,848

Ending Stocks

0

0

0

0

0

0

Total Distribution

2,040

2,039

1,995

2,036

1,995

2,048

1000 HEAD, 1000 MT CWE, PERCENT, PEOPLE, KG