CATTLE

Production

Long term herd contraction continues in 2015

Post has further reduced the 2015 calf crop by another 2.0% to 47,000 head, 2% lower than post 2014 forecast, 3% higher than USDA's earlier forecast, continuing the downward trend in cattle production. According to industry sources, the decline is a reflection of higher breeding costs in China, and Chinese meat processors' preference to import live cattle or carcasses from abroad to meet their slaughtering and manufacturing needs.

Import

Live cattle imports continue to increase in 2015

Post forecasts live cattle imports in 2015 will reach 500,000 head, far above the previous estimate. The large increase is mainly due to fast-growing demand for high quality beef, the need to improve herd productivity, and the fact that importing live cattle is often cheaper than breeding domestically.

On November17th 2014, China and Australia announced a free trade agreement (FTA), which includes a provision for annual quota for live cattle imports of 1 million head. Despite doubts expressed by some analysts that Australia will be able to meet the quota in the near future, the agreement is already reportedly spurring expedited investments in Australian farms and slaughter houses. Despite the FTA (which had still not taken affect as of early March 2015), Uruguay is expected to retain its newly acquired position as the NO.1 supplier of live cattle to China.

BEEF

Production

Production continues to show slightly increase in 2015

Post forecasts 2015 beef production will be 6.6 million tons, 3% higher than USDA earlier forecast, but below 2013 and 2014 levels. Looking ahead, the current high beef price of approximately USD 10.00/kg are reportedly attracting more investors to the industry, likely leading to increased production as early as next year. Slaughter numbers in 2014 were supported by the reported culling of dairy cattle in response to milk prices falling below the cost of production for small scale producers. Competition from the international market is expected to accelerate this trend in 2015, and results in 4% higher slaughter forecast than USDA official estimate.

Consumption

Demand to remain firm in 2015

Post has marginally increased the 2015 consumption forecast to 7.078 million tons, reflecting modest adjustments in production and imports. Demand remains firm due to a steadily growing middle-class, rising incomes, continued urbanization and increasing consumer awareness that beef can be a lower fat protein source compared with pork. However, beef's high price is expected to keep beef consumption roughly 15% that of pork.

Imports

Post forecasts 2015 beef imports at 500,000 tons, 20 percent higher than 2014 level but 3 percent lower than USDA's official estimate, as domestic production will be unable to fulfill demand. And the gap between domestic production and demand widens, China's largest suppliers, Australia, New Zealand, and Uruguay, stand to benefit. Uruguay in particular is realizing export growth as traders have stressed the country's "value for money "of its beef products.

Australia's recently signed free trade agreement with China will not yield immediate tariff reductions for its beef imports, but medium to long term prospects are bright as tariffs are scheduled to be phased out over the next four to nine years.

Note: China's ban on U.S. beef, beef products, and live cattle imposed in 2003 due to the detection of a BSE-positive animals remains in force.

The OIE (World Organization for Animal Health) has recognized that the United States' BSE‐related surveillance and mitigation measures are effective and appropriate, for both food safety and animal health. In 2014 the OIE placed the U.S. in the same risk category as China.

Cattle PS&D Table

Animal Numbers, Cattle

2013/2014

2014/2015

2015/2016

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

China

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Total Cattle Beg. Stks

103434

103434

103000

103000

102950

102300

(1000 HEAD)

Dairy Cows Beg. Stocks

14939

14939

15000

15000

15300

15300

(1000 HEAD)

Beef Cows Beg. Stocks

52500

52500

50500

50500

46000

48500

(1000 HEAD)

Production (Calf Crop)

48800

48800

48100

47900

45500

47000

(1000 HEAD)

Total Imports

98

98

130

326

135

500

(1000 HEAD)

Total Supply

152332

153103

151230

151226

148585

149800

(1000 HEAD)

Total Exports

19

19

20

20

20

20

(1000 HEAD)

Cow Slaughter

0

0

0

0

0

0

(1000 HEAD)

Calf Slaughter

0

0

0

0

0

0

(1000 HEAD)

Other Slaughter

48000

48000

46750

47500

45000

47000

(1000 HEAD)

Total Slaughter

48000

48000

46750

47500

45000

47000

(1000 HEAD)

Loss

1313

1313

1510

1406

1115

1280

(1000 HEAD)

Ending Inventories

103000

103000

102950

102300

102450

101500

(1000 HEAD)

Total Distribution

152332

152332

151230

151226

148585

149800

(1000 HEAD)

CY Imp. from U.S.

0

0

0

0

0

0

(1000 HEAD)

CY. Exp. to U.S.

0

0

0

0

0

0

(1000 HEAD)

Balance

0

-771

0

0

0

0

(1000 HEAD)

Inventory Balance

-434

-1205

-50

-700

-500

-800

(1000 HEAD)

Inventory Change

0

0

0

-1

0

-1

(PERCENT)

Cow Change

3

1

-3

-3

-6

-3

(PERCENT)

Production Change

2

1

-1

-2

-5

-2

(PERCENT)

Production to Cows

72

72

73

73

74

74

(PERCENT)

Slaughter to Inventory

46

46

45

46

44

46

(PERCENT)

Slaughter to Total Supply

32

31

31

31

30

31

(PERCENT)

TS=TD

0

0

0

0

0

0

Beef PS&D Table

Meat, Beef and Veal

2013/2014

2014/2015

2015/2016

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

China

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Slaughter (Reference)

48000

48000

46750

47500

45000

47000

(1000 HEAD)

Beginning Stocks

0

0

60

60

40

40

(1000 MT CWE)

Production

6700

6700

6525

6650

6400

6600

(1000 MT CWE)

Total Imports

412

412

460

417

515

500

(1000 MT CWE)

Total Supply

7112

7112

7045

7127

6955

7140

(1000 MT CWE)

Total Exports

30

30

31

31

32

32

(1000 MT CWE)

Human Dom. Consumption

7022

7022

6974

7056

6893

7078

(1000 MT CWE)

Other Use, Losses

0

0

0

0

0

0

(1000 MT CWE)

Total Dom. Consumption

7022

7022

6974

7056

6893

7078

(1000 MT CWE)

Ending Stocks

60

60

40

40

30

30

(1000 MT CWE)

Total Distribution

7112

7112

7045

7127

6955

7140

(1000 MT CWE)

CY Imp. from U.S.

0

0

0

0

0

0

(1000 MT CWE)

CY. Exp. to U.S.

0

0

0

0

0

0

(1000 MT CWE)

Balance

0

0

0

0

0

0

(1000 MT CWE)

Inventory Balance

60

60

-20

-20

-10

-10

(1000 MT CWE)

Weights

140

140

140

140

142

140

(1000 MT CWE)

Production Change

1

2

-3

-1

-2

-1

(PERCENT)

Import Change

316

316

12

1

12

20

(PERCENT)

Export Change

-29

-29

3

3

3

3

(PERCENT)

Consumption Change

5

6

-1

0

-1

0

(PERCENT)

Imports Percent Consumption

6

6

7

6

7

7

(PERCENT)

Exports Percent Production

0

0

0

0

1

0

(PERCENT)

Population

1349585838

1349585838

0

1355692576

1361512535

1361512535

(PEOPLE)

Per Capita Consumption

5.2

5.2

0

5.2

5.1

5.2

(KG)

TS=TD

0

0

0

0

0

0