The Meat Site:

[Mustang Sally Farm]

USDA GAIN: Mexico Livestock & Products Semi-annual
Mexico’s cattle inventories are falling as non-sensitive cattle are slaughtered or being exported due to long-term drought that is affecting the industry and driving up feed prices. The swine industry continues doing well; however, as the pig crop is greater than previously forecast. Imports of beef and pork meat are forecast to remain strong through 2012 as domestic production is not sufficient for demand and as imported product appeals to various segments of the population.



Commodities: Animal Numbers, Swine and Meat, Swine
Production:
The Post 2012 Mexican pork production forecast is 1.215 million metric tons (MMT), carcass weight equivalent (CWE), higher than the USDA forecast. This increase is driven by specific requirements from Mexican export markets, the incorporation of new breeding lines that are better able to adapt to the Mexican production system, and better farm management techniques. The Post 2011 pork production forecast has been increased slightly, as well, from the USDA estimate for the above mentioned reasons.

Traditionally, Mexican producers supply live swine for slaughter at a weight of 105 kilograms for the purpose of ensuring leaner meat carcasses. Beginning in 2011 and in 2012, however, some slaughter operations producing swine for export are holding hogs until they reach 120 kilograms. Additionally, better genetics in the breeding swine population are producing more live animals per litter and have resulted in hog herds that are able to gain the desired market weight in less than 180 days, which is the Mexican industry average. The United States’ recognition of Mexican States as free of classical swine fever (CSF) has been one of the key factors to opening foreign markets for Mexican pork. The new and additional market access that Mexico has gained and the demand for high quality pork products in Asian markets are other important factors that are encouraging higher production.

Nevertheless, the exceptional drought, mentioned previously, is affecting pork production profitability, as higher feed grain prices have stressed production. As in other producing countries, animal feed for pork is based on yellow corn and sorghum. Some northern Mexico producers, however, are feeding their hogs with white corn or wheat (if available due to temporal surpluses during Mexico’s growing seasons). In Mexico, feed represents approximately 64 percent of the production cost.

Consumption:
The Post 2012 pork consumption forecast is higher than the USDA forecast as purchasing power gains and demand, specifically, for hams and picnic remains strong. These are generally inexpensive cuts that can be consumed as deli meat by middle and upper income consumers. Moreover middle income consumers (a smaller fraction of the population) are shifting consumption habits from poultry and beef back to pork. The Post 2011 consumption estimate has been revised lower than the USDA estimate as higher pork prices encouraged consumers to consume less expensive animal proteins.

Trade:
Mexico’s imports consist of hams and mechanically deboned meat (MDM) for the preparation of sausages, deli hams, and other cold cuts. The Post 2012 pork import forecast remains the same as the USDA forecast (650,000 MT CWE). The Post 2011 revised pork import estimate of 594,000 MT (CWE) is lower than the USDA estimate as higher international pork prices and competing international demand increased prices so that lower-income consumers needed to switch to lesser expensive animal proteins.

Although Mexico is a net meat importer, it is expected that during 2012, exports of pork meat to Japan will continue. Industry sources report that they are able to receive greater profits by exporting higherquality cuts to overseas Asian markets. The United States represents a potential niche market for specialty pork cuts. This market could be attractive to Mexican pork producers, but producers would need to find a market for other parts of the carcass (e.g., head, legs, and shoulders). Mexico’s distribution channels for these products exist, but the material would be competing with current supplies and potentially force down margins.

Policy:
The GOM continues implementing a number of programs to support agricultural production. Among these, the Agricultura Por Contrato (Forward Contract Program) is of significant and special importance for the swine industry. Both crop producers and animal feeders are encouraged to contract for grain delivery through this Forward Contract Program. The GOM, specifically, SAGARPA, provides a subsidy towards the cost of hedging. The hedge along with the actual contract provides assurance for a set grain price for the animal producers. While the program is open to all producers, the larger and more sophisticated producers have shown a greater interest in participating in the program.

On October 21, 2011, the Secretariat of Economy (SE) published in the Diario Oficial (Federal Register) an announcement revoking the retaliatory import tariffs on 99 U.S. agricultural and industrial products. This elimination of tariffs was the second step in the cancelation of tariffs after signing a bilateral memorandum of understanding on July 6, 2011. The tariff on 2 harmonized tariff system (HTS) line items related to pork meat (HTS 0203.12.01 and 0203.22.01) was reduced to 0 percent with the October 21 announcement. (See GAIN Report MX1076 Mexico Eliminates Trucking Retaliation Tariffs)



Commodities: Animal Numbers, Cattle, Meat, Beef and Veal
Production:
The Post 2012 Mexican beef production forecast is 1.83 million metric tons (MMT), carcass weight equivalent (CWE), slightly lower than the USDA forecast as cattle continue to be slaughtered at slightly lower weights than prior years. Since late 2011, northern Mexican cattle feeders have started slaughtering cattle, including feeder calves and dairy cattle as a measure to cope with an exceptional long-term drought affecting most of the country. The cattle industry has been struggling with strong international grain demand during the last half of 2011 which generated tighter feed supplies and higher production costs. Thus, to cope with the lack of forage cattle, feeders were compelled to partially liquidate herds during the last quarter of 2011. This was accomplished through the slaughtering of nonsensitive (not for breeding) cattle and the continued export of calves to the United States and more recently to Turkey.

The development of Turkey as a new market destination for Mexican live cattle has raised concerns by the cattle feeders and packers as it could have a negative effect on meat production. During 2011, the export of calves to the United States, Turkey, and other established markets, reached 1.435 million head, slightly lower than the USDA estimate. Without a sharp, rapid and significant improvement in breeding to improve the efficiency of the calf crop, the export of calves could cause future limited availability of steers for slaughtering intended to supply the domestic beef market.

Consumption:
The Post 2012 beef consumption forecast anticipates consumption figures will be slightly lower than the USDA forecast. Beef prices are expected to increase as a result of tighter suppliers (i.e. increased Mexican beef exports and lower production volumes) and thus reduce domestic market demand in favor of other animal protein sources. Tighter supplies will affect lower-income households more than middle and upper income consumers (a smaller portion of the population) who will maintain or even be able to see a slight increase in their consumption levels. Middle and upper income consumers are reportedly increasing their purchases of imported beef as numerous news accounts have and government testing has found trace amounts of an unapproved compound in domestic product. As such, sources report they are altering consumption preferences and practices. The Post revised 2011 beef consumption estimate is increased from the USDA estimate due to increased purchasing power among all income groups and lower than anticipated exports.

Traditionally, most low to medium income households consume beef cuts known as “bistec” (muscle thin beefsteak). Demand for finer cuts is limited to upper-income consumers, a smaller segment of the population, and, as such, finer cuts are often available for export markets.

Trade:
The Post 2012 revised beef import forecast is 300,000 MT (CWE), which is higher than the USDA forecast. As indicated earlier, drought and increased Mexican beef exports are preventing the meat sector from keeping up with demand increases from specific sectors of the population. Moreover concerns regarding food quality and food safety have led middle and upper income consumers to purchase higher volumes of imported beef.

During 2011, Mexican industry members made a concerted effort to diversify export market destinations. As such, industry sources report Mexico is exporting beef to a number of developing economies. Additionally, Mexico continued exporting beef products to Japan, the United States, Russia, and Korea. Mexico’s meat processors and traders expect that these markets will purchase greater volumes of Mexican beef during 2012. Specifically, there is strong industry belief that Mexico will be able to increase exports to Japan as negotiations for an expanded tariff-rate quota and a lower duty volume on its beef exports were concluded recently. Mexican industry is also optimistic on exporting greater volumes to the United States as trade sources indicate that the drought and cattle herd reduction experienced in the southern United States is encouraging more purchases of Mexican beef.

Sources have stressed that the Mexican beef industry must develop added-value product exports to strengthen all aspects of the marketing chain. Sources indicate that this will allow producers to obtain greater profits. However, Mexico lacks sufficient grazing land for large herds and for animals closer to desirable market weights. As such, the export of live cattle is a trend that will likely continue for several years.

Policy:
On December 6, 2011, the Secretariat of Agriculture, Livestock, Rural Development, Fishery and Food (SAGARPA) National Service of Health, Food Safety, and Food Quality (SENASICA) Import and Export General Directorate announced that Mexico will only be accepting the latest version of the FSIS Letterhead Certificates that were agreed upon and included in various official communications with Post. If shipments are not accompanied with these new Letterhead Certificates they will likely be held up at the border until a new replacement certificate (also known as “in lieu of” certificate) can be issued. The Letterhead Certificates have been posted on USDA’s FSIS Export Library and the Spanish requirements are posted on SENASICA’s website under the Modulo de Consulta de Requisitos Zoosanitarios para la Importacion (MCRZI).

In order to support better herd management, SAGARPA is promoting a voluntary program called “Reliable Provider Free of Clenbuterol”. Currently, SAGARPA offers producers delivering cattle to Tipo Inspeccion Federal (TIF) establishments a subsidy of 220 pesos (approximately U.S. $16.40) per animal under this program. SAGARPA aims to discourage producers from using ß-agonists during the last stages of cattle production as the substances are not approved for livestock use in Mexico. The use is considered illegal and can be detected in random sampling programs conducted at TIF facilities as well as municipal slaughter houses. Industry and government sources have declared that 97 percent of the domestic meat supply is safe for human consumption.

Recently, Mexico removed beef feet and sweet breads from the list of banned U.S. products. However, a number of other products remain, including; ground beef, small intestines, weasand meat, and head meat. (NOTE: the additional market access for beef feet and sweet breads will not affect the Post or USDA Production, Supply, and Demand forecasts as these tables refer only to muscle meats and NOT variety meats nor offals).

Currently, many producers sell their calves at an early growth stage. Private sources are jointly working with government authorities to implement a new program called “Development of Suppliers”. The program offers training, financial support, and technical assistance to calf producers. Through this program producers would be eligible to obtain financing that should allow them to feed and sell animals at a higher weight and when they are ready for slaughter. Presumably, this should not affect forecasts as entities in the marketing channel were feeding out the animals. However, the policy change should allow greater producer returns and may provide added strength to rural agricultural production.

[Mustang Sally Farm]

Outlook: Beef imports exceed exports in January
University of Missouri Extension   |   Updated: March 16, 2012


Beef imports exceeded exports during January for the first month since August 2010. Beef exports during January were the lowest of any month since April 2010. January exports were down 8 million pounds (4.4%) compared to a year ago, largely because Hong Kong purchased 7 million pounds less U.S. beef than in January 2011. January beef imports were up 43 million pounds (28.8%) compared to a year ago and the highest since June 2011.
 
In total, 8.6% of January beef production was exported. Beef imports equaled 9.0% of January production.
 
January domestic retail beef demand was up 8.1% compared to a year earlier; but export demand for U.S. beef was down 1.9%. Packer demand in January for fed cattle was up 3.8% compared to January 2011.
 
Fed cattle prices were steady this week with moderate sales volume. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $126.34/cwt, down 43 cents from last week, but up $12.05/cwt from the same week last year. Steer prices on a dressed basis averaged $202.23/cwt this week, up 41 cents from a week ago and up $17.45 from a year ago.
 
Beef cutout value was sharply lower this week. On Friday morning, the choice boxed beef carcass cutout value was $189.92/cwt, down $5.90 from last week. The select carcass cutout was down $5.77 from the previous Friday to $187.94 per hundred pounds of carcass weight. The choice-select price spread is only $1.98/cwt. A year ago, steer dressed prices were $2/cwt under the choice cutout value. This week dressed prices are $12/cwt above the choice cutout value.
 
This week's cattle slaughter totaled 619,000 head, down 1.9% from the week before, but the same as a year ago. The average dressed weight for slaughter steers for the week ending on March 3 was 850 pounds, down 4 pounds from the week before, but up 21 pounds from a year earlier. Weights have been above year-earlier for eight straight weeks. Year-to-date beef production is down 3.7%.
 
Feeder cattle prices this week were generally steady to weak with more auctions lower than higher. Oklahoma City prices were mostly steady with the ranges for medium and large frame #1 steers: 400-450# $208-$217, 450-500# $204-$210.50, 500-550# $177.75-$204, 550-600# $179-$196.50, 600-650# $167-$182.75, 650-700# $161.50-$171, 700-750# $155-$166, 750-800# $149.25-$164.35, 800-900# $140-$154.75, and 900-1000# $133.50-$142/cwt.
 
The April live cattle futures contract settled at $125.30/cwt today, down 72 cents compared to last Friday. The June contract closed at $122.70/cwt, down 90 cents for the week. August fed cattle settled at $124.52 and October at $129.87/cwt.
 
March feeder cattle futures lost 52 cents this week to settle at $153.40/cwt. The April contract ended the week at $154.30/cwt, down $1.55 from the previous Friday.
 
Source: Ron Plain

[Mustang Sally Farm]

Monday, April 02, 2012

Education Needed on Lean Finely Textured Beef

US – Lean, finely textured beef “is meat” and a healthy form of protein, according to a Texas A&M University expert.
 
Dr Russell Cross, head of the Department of Animal Science at Texas A&M University.
 
Dr Russell Cross, head of the department of animal science at Texas A&M, said lean, finely textured beef is nutritious, and a production process he approved while serving as administrator of the U.S. Department of Agriculture-Food Safety Inspection Service in 1993.
 
“The simplest way to describe this is that it is meat, it’s beef,” he said.
 
“The protein content is similar to what is ground in a steak. This product is no different than meat; that’s the reason USDA calls it meat.”
 
Dr Cross said much misinformation has been reported and discussed in various media. That’s why it is important that the facts be told about the production of lean, finely textured beef, which comes from traditional carcase-harvesting-methods, he said.
 
“The carcase is chilled 24 to 36 hours and broken down into parts we call primal cuts, and put into vacuum bags and sent to retail stores. And that is cut into steaks and roasts,” he said.
 
“The trimmings taken from this process — the lean, finely textured beef — is separated from the fat and from the lean trimmings. These products are frozen and put into a 60-pound box and shipped to processing plants that generate ground hamburger meat.”
 
Dr Cross said there is no difference in taste, and that “it is perfectly natural to have trimmings that come from cutting out steaks and roasts from the carcase.”
 
“These trimmings have pieces of lean still attached to them,” he said.

“It is valuable; it’s meat. Lean, finely textured beef is a process of centrifugation. It separates the lean and the fat, resulting in a very nutritious and very safe product.
 
Dr Cross said every time an animal is harvested, 12 to 15 pounds of this product is generated and used in ground beef.
 
“It’s been used for more than 20 years,” Dr Cross said.
 
From a beef industry perspective, this adds value to the carcase, Dr Cross said.
 
“We try to harvest every single aspect of the animal during the process,” he said.

“This 12 to 15 pounds would be that amount of protein not on the market. The fact we are going through this exercise of removing it from the market has caused the price of lean trimmings to go up over 15 per cent. That’s going to cause the price of ground beef to go up, and we all know who is going to pay for that – the consumer.”
 
He said the Southwest just came off the worst drought in its history and the region “lost more than 35 percent of our cows in Texas alone.”
 
“We are going to have a shortage of protein and this is just adding to that shortage,” Dr Cross said.

“This is going to cause the price of a lot of our products to go up.”
 
Dr Cross said he and faculty members, as well as those who serve in dual roles with the Texas AgriLife Extension Service and Texas AgriLife Research, will continue to educate consumers on the facts of lean, finely textured beef.
 
“We have people who are very knowledgeable about this product both on the quality side and the food safety side,” he said.
 
“We will do what we always do – we will collect the right data and get it out to the public and to the industry so they can use it. We will make it a priority to get the real facts out to the public.”

[Mustang Sally Farm]

Tuesday, April 03, 2012

Massive Growth for Meat Exports

UK - Exports of livestock products rose to £2.325 billion in 2011, an increase of 22 per cent from 2010, according to data released by EBLEX and BPEX.
 
In 2006, the first year following the resumption of beef exports, total livestock product exports represented only £1.032 billion.

Carcase meat exports make up the vast majority of these exports, with beef representing 18.8 per cent, lamb and mutton 16.3 per cent, poultry 13.1 per cent and pork 7.4 per cent of the total value. The fastest growing category is beef offal, sales of which have more than doubled over the last two years. The fastest growing export region is the Far East.

Jean-Pierre Garnier, export manager for EBLEX and BPEX, said: “These impressive figures vindicate our efforts and those of individual exporters to boost exports of livestock products over the last few years.

“Global forces such as tight supply and a favourable exchange rate have certainly played a part in increasing our export opportunities, however without strategic planning and hard work we would not be in a position to take advantage of the situation.

“We are particularly pleased to see such positive results from our activities around offal and by-products as well as our joint initiatives with Government to open new markets.

“With a strong export plan in place for 2012-13, we can foresee further expansion not only in our core Western European markets but also in the Far East, Sub-Saharan Africa and many other markets.”

“There is certainly a high level of enthusiasm and confidence among meat exporters which augurs well for the future.”

HMRC export statistics show carcase meat exports in 2011 totalled £1.713. EBLEX estimates exports of other livestock products, including offals and hides and skins, totalled £0.612 billion.

[Mustang Sally Farm]

Wednesday, April 04, 2012
Massive Growth in Meat Exports
UK - Exports of livestock products rose to £2.325 billion in 2011, an increase of 22 per cent from 2010, according to data released by EBLEX and BPEX.
 

In 2006, the first year following the resumption of beef exports, total livestock product exports represented only £1.032 billion.

Carcase meat exports make up the vast majority of these exports, with beef representing 18.8 per cent, lamb and mutton 16.3 per cent, poultry 13.1 per cent and pork 7.4 per cent of the total value. The fastest growing category is beef offal, sales of which have more than doubled over the last two years. The fastest growing export region is the Far East.

Jean-Pierre Garnier, export manager for EBLEX and BPEX, said: “These impressive figures vindicate our efforts and those of individual exporters to boost exports of livestock products over the last few years.

“Global forces such as tight supply and a favourable exchange rate have certainly played a part in increasing our export opportunities, however without strategic planning and hard work we would not be in a position to take advantage of the situation.

“We are particularly pleased to see such positive results from our activities around offal and by-products as well as our joint initiatives with Government to open new markets.

“With a strong export plan in place for 2012-13, we can foresee further expansion not only in our core Western European markets but also in the Far East, Sub-Saharan Africa and many other markets.”

“There is certainly a high level of enthusiasm and confidence among meat exporters which augurs well for the future.”

[Mustang Sally Farm]

Thursday, April 05, 2012

Beef Exports to US Hit Three Year High

AUSTRALIA - Australian beef and veal exports during March hit a three year high to the US, reaching 26,786 tonnes swt, with total shipments for March back five per cent year-on-year, at 83,373 tonnes swt.


Despite the year-on-year decline in March, Australian exports for the first quarter of 2012 were up 1.5 per cent on 2011, at 209,245 tonnes swt, according to Meat and Livestock Australia.
 
After going close in February, the US was Australia’s largest export market by volume, surpassing Japan (25,028 tonnes swt) for the first time in three years, by 1,758 tonnes swt.

However, the return of the US to Australia’s largest beef export market (albeit for only one month so far) is primarily a tale of two markets – with the volumes to the US resurgent on the back of record imported (mainly grinding) beef prices, while trading conditions to Japan continue to remain very tough.

Attracted by historically high US prices for beef so far in 2012, Australian beef shipments to the US increased 73 per cent year-on-year during March, to 26,786 tonnes swt.

The significantly higher shipments in March continued the export revival of recent months, with exports to the US up 76 per cent for the first quarter of 2012, to 61,900 tonnes swt.

However, it should also be noted that the sharp increase in exports so far in 2012 is compared with very low 2011 volumes, when exports for the calendar year were the lowest since the late 1960’s.
 
In contrast to the US, export conditions to Japan during March remained very difficult for Australian exporters – largely a combination of subdued consumer demand and increased competition from US beef, assisted by the weak US$.

At 25,028 tonnes swt, exports to Japan during March were down 21 per cent and 28 per cent on March 2011 and the five-year March average, respectively, along with being the lowest March total since 2003. For the first three months of 2012, Australian beef exports to Japan were down 17 per cent year-on-year, at 65,284 tonnes swt.
 
Similarly to Japan, an increase in the competitive position of US beef in the Korean market also impacted demand for Australian beef to Australia’s third largest beef export market.

Adding to the tough export environment, the supply of traditional Hanwoo beef has also reportedly increased in recent months, tempering demand for imported product. Australian beef exports to Korea for March were 7,921 tonnes swt – a decrease of 52 per cent on the very high March 2011 volume (16,555 tonnes swt).
 
With prices for imported beef to the US anticipated to remain high throughout April, the increase in Australian shipments is expected to be maintained in the coming weeks.

However, the outlook for both Japan and Korea is somewhat less certain, further complicated by the likely decrease in cattle throughput due to the Easter disruption to processing activities.

[Mustang Sally Farm]

Positive Indicators for the US Turkey Market

The US turkey market enjoyed another profitable year in 2011 and could extend its success into this year, according to Joel Brandenberger, president of the US National Turkey Federation. Senior editor, Jackie Linden, reports from the Turkey Science and Production Conference, held on 22 and 23 March 2012 in Macclesfield, UK.

Among the positive indicators are slow and managed growth in output, less volatile feed costs, good export markets and a strengthening domestic economy, which is helping bolster demand at home, said Mr Brandenberger. There are warning signs, however. These include an increase in the volumes in cold storage, a softening of the ground turkey and parts market, long-term instability in production costs and a highly uncertain regulatory position.




Figure 1. US turkey production
 
Interesting to note from Figure 1 is that 2008 produced a peak in both turkey numbers and meat output, which led to a jump in the volume of turkey meat in cold storage and a slump in profitabilty the following year. Bird numbers and turkey meat production have since been stable, said Mr Brandenberger, and the volumes in cold storage have declined again to steady levels. There has been gradual growth in exports since 2009, approaching 600 million pounds for 2011, he indicated.

In the US, chicken consumption overtook that of beef in the 1990s to become the nation's favourite meat and the figures for last year indicate average annual per–capita chicken consumption at between 80 and 90lbs, which compares with between 16 and 16.5lbs for turkey meat. This is a good sustainable level for the turkey industry, explained Mr Brandenberger, and one which is profitable. Interestingly, years in which per–capita consumption has reached or exceeded 17lbs have not generated good returns for the industry.

Furthermore, the US regulatory environment is changing, said Mr Brandenberger, both on farm and in the processing plant. The biggest changes are being seen in food safety, driven by three main factors: recalls of ground turkey last year; the USDA’s desire to continue modernising the inspection systems and a shrinking federal budget.
 
2011 Turkey Meat Recalls
 
There were three major recalls of turkey meat in the US in 2011:
 •frozen turkey burgers for Salmonella Hadar in March
•fresh ground turkey for Salmonella Heidelberg in August, which became the biggest turkey meat recall in US history (36 million pounds), and
•fresh ground turkey for Salmonella Heidelberg in September.

Mr Brandenberger explained that National Turkey Federation members convened a ‘Turkey and Salmonella Summit’ three weeks after the biggest recall, during which the participants developed a comprehensive action plan to enhance Salmonella control in turkey.

The key components of the plan, he explained, were: reassessment of HACCP/Salmonella control plans; a comprehensive survey of ground turkey; clarification of MST definition; review of Salmonella performance standards, and identification of pre–harvest research needs.

The Government response came from the US Department of Agriculture (USDA), which developed a comprehensive response, covering both turkey only and all ground meats.

The biggest issue, explained Mr Brandenberger, was the USDA setting very strict criteria for the plant where the recall had occurred before it could resume grinding. This followed the Department’s finding that the plant’s initial response was inadequate. The government tried to set standards that would effectively have declared Salmonella Heidelberg an adulterant in raw ground turkey meat but the lack of a rapid serotyping test prevented what would have been a zero–tolerance policy for Salmonella.

USDA followed this with the first steps towards pre–harvest testing.
 
Current Situation
 
Ultimately, USDA settled for a plan that was more stringent but did not fundamentally change the regulatory structure, said Mr Brandenberger. In the meantime, the government continues to increase its scrutiny of grinding operations but it is struggling to address the issue of certain Salmonella strains. A meeting is planned for later this year on pre–harvest controls.

The turkey industry continues with its action plan and is beginning to focus on the Centers for Disease Control (CDC) in foodborne illness investigations and recalls.
 
Other Regulatory Issues
 
USDA is moving forward with a major modernisation of poultry meat inspection, said Mr Brandenberger, and it is focusing more and more on Campylobacter. The Food and Drug Administration (FDA), meanwhile, is on the verge of initiating a process to eliminate sub-therapeutic label claims for antibiotics in farm animals.

Environmental regulations remain a major issue, he added, as do non–tariff trade barriers. He mentioned that the issues with the EU remain unresolved.
 
Feed Costs
 
Starting with some background, Mr Brandenberger explained that Congress created the Renewable Fuel Standard (RFS) in 2005, which took effect the following year and was further expanded in 2007. At the beginning of 2006, corn (maize) sold for US$3 per bushel in the US. Now, it is around $6.00, he said.

According to Mr Brandenbeger, the diversion of maize from food/feed to fuel has led to the most fundamental restructuring of production costs and resulting food costs in a generation. In 2011, the volume of maize used for ethanol exceeded that for animal feed. Citing data from Thomas E. Elam, Mr Brandenberger showed that the ending stocks/use ratio in the US is forecast to be just seven per cent for the 2011/2012 year, adding that levels below 10 per cent have been critical historically.

From the same source, he showed how the average farm price from maize has risen alongside the proportion used for ethanol from around $2 per bushel in 2005/2006 to a projected $6 for 2011/2012. Over this period, the percentage of maize going to ethanol has increased from around 12 per cent to 40 per cent of the total harvest.
 



Figure 2. Major US feed ingredients
 (Data from Thomas E. Elam)
 
Another impact of the ethanol policy has been that the byproduct, distillers dried grains with solubles (DDGS), has overtaken soybean meal as the number two feed ingredient in the US behind maize.

However, the backlash has begun, Mr Brandenberger said, as Congress last year allowed two key ethanol supports to expire, while some in Congress are expected to begin pushing for additional ethanol reforms and action could start this year.

Finally, Mr Brandenberger turned his attention to other government issues. He highlighted the struggle between Congress and the USDA over the latter's efforts to regulate production poultry and livestock contracts. Furthermore, the Obama Administration and Congress will continue to wrestle over human nutrition issues, including obesity, which will likely have implications for the turkey industry in future, he said.
 March 2012

[Mustang Sally Farm]

Cattle Outlook: Pink Slime Impacts Beef Prices

US - The publicity about Lean Finely Textured Beef (LFTB) and the unappealing new nickname associated with it is having a big impact on beef prices, writes Ron Plain, University of Missouri.

 
Ron Plain
 
The price spread between 90 per cent lean fresh beef trimmings and 50% lean trimmings during the last week of March was a record $134.77/cwt. Fresh 90 per cent lean trimmings averaged $217.71/cwt and fresh 50 per cent lean trimmings were $82.94/cwt. The price spread widened further this week.
 
The LFTB process has been used for years to remove fat from beef trimmings. The recent adverse publicity from calling the product "pink slime" has caused the value of high fat beef trimmings to plummet. Yesterday, fresh 50% lean beef trimmings averaged $54.80/cwt. Five weeks ago, these trimmings averaged $100.66/cwt.
 
The beef cutout value was lower again this week for the fifth consecutive week. On Friday morning, the choice boxed beef carcass cutout value was $177.41/cwt, down $6.40 from last week. The select carcass cutout was down $8.17 from the previous Friday to $174.98 per hundred pounds of carcass weight. The choice-select price spread is $2.43, up from $0.65/cwt a week ago.
 
Fed cattle prices were sharply lower this week and are now below year-ago for the first time since early January 2010. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $121.91/cwt, down $3.81 from last week and down $1.21/cwt from the same week last year.

Steer prices on a dressed basis averaged $193.39/cwt this week, down $8.49 from a week ago and down $3.03 from a year ago. Steer dressed prices are $15.98/cwt above the choice cutout value. This week's cattle slaughter totaled 622,000 head, up 3.3 per cent from the week before, but down 1.3 per cent from a year ago. The average dressed weight for slaughter steers for the week ending on March 24 was 844 pounds, up 2 pounds from the week before, up 17 pounds from a year ago, and above a year earlier for the 11th consecutive week.
 
Feeder cattle prices were generally lower this week. Oklahoma City prices were mostly $4 to $8 lower with the ranges for medium and large frame #1 steers: 400-450# $213-$220, 450-500# $201-$214, 500-550# $188-$200, 550-600# $177-$191, 600-650# $169-$175, 650-700# $152-$168, 700-750# $149-$156.50, 750-800# $143.50-$152, 800-900# $134.25-$147, and 900-1000# $128-$134.25/cwt.
 
For the fifth consecutive week, live cattle futures contracts were lower this week. Because of the Good Friday holiday, the futures markets ended the week a day early. The April live cattle futures contract settled at $118.32/cwt on Thursday, down $2.13 compared to last Friday and down $12.60 from 5 weeks earlier. The June contract closed at $115.82/cwt, down 33 cents for the week. August fed cattle settled at $118.47 and October at $123.97/cwt.

[Mustang Sally Farm]

Fat Replacers Market Booming in US

Increasing health concerns, ageing population, mounting demand from end-use markets and alarming rise in obesity levels are triggering growth in thethe US fat replacers market.

A new report from Global Industry Analysts shows that the surge in popularity for low-calorie, low-fat, healthy and functional foods in developed markets such as the US is providing an added impetus steering the market towards a volume figure of 394,900 tonnes by 2017.
 
The report says that the US fat replacers market is highly mature and corners a reasonably stable niche in the global low-fat food trade.
 
Consumer trends continue to influence the industry, with low-fat and fat-free products being the current craze.
 
The fat replacers market is poised to exhibit healthy growth over the ensuing years, with majority of the sales to be sourced from mature markets for carbohydrate and protein-based fat replacers, GIA says.
 
In particular, functional fat replacers have been growing at a healthy pace over the years, triggered by increasing health concerns and demand for food ingredients with enhanced flavor and texture. Potential opportunities for fat substitutes exist based on hasty commercialisation of olestra, the largest selling fat-based fat replacer.
 
The market research report says that carbohydrate-based fat replacers continue to lead the market for fat replacers because of their status as US FDA recognized GRAS substances.
 
Fat replacer ingredients that offer dietary and processing advantages are likely to witness a healthy growth, with carbohydrate-based fat replacers poised to display a healthy CAGR of 5.7 per cent up to 2017.
 
Lately, the US market for hydrocolloid-based fat replacers have been growing robustly over the last few years, driven by the consumers increased awareness and quest to stay fit and healthy.
 
Burgeoning consumer and industry concerns over non-metabolized fat replacers have slowed down further improvements in the fat-based fat substitutes market.
 
Fat replacers are anticipated to log significant growth in the meat and dairy sector, as low calorie and reduced-fat foods such as low-fat ice creams, spreads and meat products are gaining huge popularity in these markets.
 
The declining demand for zero-fat food products is negatively influencing the overall demand for protein-based fat replacers, expected to grow over the years at a tepid pace.
 
Manufacturers of protein-based substances are more focused on dietary applications of protein ingredients such as dietary beverages and sports nutritional products instead of fat substitute applications, mainly due to the extremely profitable market for dietary and nutritional products.
 
The fat-free and low-fat foods market is facing stiff competition from alternative sweeteners and other products containing sugar alcohols.

The impact of rising competition is evident from the heightened levels of product development and burgeoning promotional expenditure.
 
Falling volumes was a major issue for manufacturers, despite surging values.
 
Fat replacer manufacturers are increasingly resorting to investments in improved process technologies and newer product developments to withstand the competition.

The manufacturers are all geared up to enhance the quality of functional fat replacers to provide improved taste in low-fat foods.
 
Major players profiled in the report include Advanced Food Systems Inc., Ashland Specialty Ingredients, CP Kelco, California Natural Products, Carrageenan Company, FMC BioPolymer, Grain Processing Corporation, Gum Technology Corporation, Kraft Food Ingredients Corporation, National Starch Food Innovation Group, P&G Food Ingredients, PGP International Inc, TIC Gums Inc., and Z-Trim Holdings Inc.
 
The research report “Fat Replacers: A US Market Report” reviews the fat replacers markets, the impact of recession, current market trends, key growth drivers, recent product introductions, recent industry activity, and profiles of major/niche global as well as regional market participants.

[Mustang Sally Farm]

Thursday, April 12, 2012

Record February Lamb Production

AUSTRALIA - Australian lamb production during February rose 23 per cent year-on-year, to 37,325 tonnes cwt, on the back of higher slaughter across the eastern states (Australian Bureau of Statistics).


Meat and Livestock Australia says that this was the highest national February total on record, with all-time highs in NSW (9,292 tonnes cwt) and SA (8,302 tonnes cwt).
 
WA production remained limited by the historically small state flock and the improvement in seasonal conditions, declining 16 per cent on last year, to 3,418 tonnes cwt. WA slaughter was down 18 per cent year-on-year, at 155,156 head.
 
Victorian slaughter, in particular, was higher than last year, up 34 per cent during February, to 700,934 head.
 
Dry conditions across much of the west of the state influenced turnoff rates, with a slight decline in average carcase weights resulting in production increasing 33 per cent to 15,150 tonnes cwt.

NSW, on the other hand, processed significantly heavier lambs, with predominantly good growing conditions resulting in delayed turn-off for many producers. NSW slaughter jumped 24 per cent year-on-year, to 395,975 head, while production lifted 34 per cent.

[Mustang Sally Farm]

Robot to Detect Tainted Meat

PHILIPPINES - A team of Philippine high school students is to enter a robot that can detect double dead meat - or "botcha" - in an international competition.
 

The “Meat’s Anti-Germs and Infection Solution" or MAGIS Version 2 will represent the Philippines in the 2012 1st Lego League, which will be held in St. Louis, Missouri from 25 to 28 April.
 
According to a report on ABS-CBN News, the Department of Science and Technology – Science Education Institute (DOST-SEI) said MAGIS Version 2 was created and designed using Lego NXT controllers.
 
It added that the robot is equipped with thermal and colour sensos, which can recognise whether meat istainted or still good for consumption.
 
The team from is Dr. Yanga’s College Inc. (DYCI) in Bulacan.

[Mustang Sally Farm]

LMC: Strong Retail Red Meat Sector Last Year in NI

NORTHERN IRELAND, UK - While the vast majority of NI beef is exported to GB or mainland Europe, the retail beef and lamb market in NI remains a small but essential market for the NI industry.

With the retail volume sales of red meat market under pressure in recent months in GB, it is worth considering how the NI retail market is performing by comparison.

In terms of volume sales, the NI meat market generally has been under pressure over the last year (52 weeks ending 18 March 2012). According to Kantar data for NI, volume sales of all meats combined are down by nine per cent. The good news is that despite this decline in overall meat volumes, sales of beef and lamb have been relatively robust.

Volume sales of beef were up by almost one per cent in the 52 weeks ending 18 March 2012, and although lamb sales in NI fell by 3.4 per cent over the same period, this looks positively robust when compared with the 13 per cent decline in volume sales of other meats.

Perhaps the obvious reason for the reduced volumes is higher prices. The average retail beef price in NI rose by 11 per cent to £6.57/kg over in the year ending 18 March, compared to the previous year. The average retail lamb price rose by 13 per cent to £7.54/kg over the same period. By comparison however, the average price of all other meats rose by 80p/kg or almost 20 per cent to £5.09/kg. The rate of price increase for these other meats was clearly much stronger and that helps to explain the improved relative position of beef and lamb which is encouraging.

The net result of rising prices and reduced volumes sales meant that in the year ending 18 March total consumer expenditure on meat generally was up by six per cent, despite the nine per cent decline in sales. Over the same period, retail expenditure on beef and lamb rose by 11.3 per cent and 9.3 per cent respectively. Expenditure on all other meats rose by a modest 3.4 per cent. These figures plainly show that in the NI retail meat market, beef and lamb demand is holding up very well, relative to other meats. Red meat has in fact eaten into the market share of some of those other meats over the course of the last year.

In terms of volumes, beef’s share of total meat sales increased from 28 per cent in the year ending 20 March 2011, to 31 per cent in the year ending 18 March 2012. Lamb’s share of the total meat market was steady at just four per cent of total volume sales in the last year. Beef accounts for just over a third of total retail expenditure on red meat.

 In the 52 weeks ending 18 March 2012, beef expenditure accounted for 36 per cent of all meat sales, up from 34.4 per cent the previous year.

In the last year, 99.5 per cent of shoppers purchased meat. This figure was unchanged from the previous year. Despite strong performance in terms of volume sales and consumer expenditure, beef penetration in NI has been under pressure. The proportion of consumers that purchased beef has fallen by 1.5 percentage points to 92.2 per cent of consumers in the year ended 18 March 2012. The proportion of NI consumers buying lamb has fallen by 2.2 percentage points to 52.1 per cent in the last year.

[Mustang Sally Farm]

Wednesday, April 18, 2012
Chinese Olympics Athletes Stop Eating Meat
CHINA - Chinese athletes are avoiding eating meat ahead of the Olympics Games out of fear that domestic pork, beef and lamb could contain substances banned under anti-doping rules.


According to Channelnewsasia.com, they are instead relying on protein powder and fish to meet the high protein needs of top-class athletes, the Yangtze Evening News reported, as China goes after another successful haul of medals.

At least 196 competitors under China's National Aquatics Centre, which governs swimming, diving and other water sports, have been off meat for the past 40 days, the report said. The London Games are 100 days away.

China's food production industry is notorious for frequent scandals involving producers who illegally or excessively use various additives in the raising of livestock.

Authorities are particularly concerned that athletes could unwittingly consume clenbuterol, which is banned for food production in China but has been found in contaminated pork.

Clenbuterol can speed up muscle-building and fat-burning to produce leaner meat but has also been used by athletes as a performance-enhancer. It is banned by the World Anti-Doping Agency.

China's 2008 Olympic women's judo gold medallist Tong Wen was banned in 2010 for two years for testing positive for the substance.

Chinese media reported earlier this year that national sports authorities had banned athletes from consuming meat outside of state training facilities.

Officials with the National Aquatics Centre and the sports ministry could not immediately be reached for comment.

Authorities have tightened supervision at training centres to ensure no clenbuterol-tainted food slips through and have launched checks of local produce near such centres, the Yangtze Evening News said.

"The kitchen is probably the most secure place at the Jiangsu province sports bureau... locks are installed on entry doors and only (kitchen) workers can enter," it said.

[Mustang Sally Farm]

Thursday, April 19, 2012
Brazil Beef Export Revenue to Grow 20 Per Cent

BRAZIL - Brazil beef exports will bring in $6 billion this year, says the Brazilian Association of Meat Exporters (ABIEC).


President of ABIEC, Antonio Jorge Camardelli said that this is an increase in revenue of 20 per cent compared to 2011.
 
Volume exported is estimated to increase by 10 per cent.

Mr Camardelli said he is extremely optimistic about the export market for beef.
 
"In the first quarter of 2012, despite a slight drop in value and volume of beef exported, the price of beef per tonne, increased 1.74 per cent."
 
He said that the three pillars, on which beef exports rely, the market, supply and foreign exchange rates are all improving.

As for foreign exchange rates, the US dollar is becoming more and more favourable to Brazilian exporters.

Mr Camardelli said that despite European demand for meat not increasing, output is falling, which leaves plenty of opportunities for Brazilian exports. "We are also looking at other markets, such as the Middle East," Mr Camardelli said.
 
Monthly slaughter in Brazil is currently around 1.8 million head per month. Beef production in Brazil is increasing, he said.

Despite having a positive outlook, the value beef exports to Iran fell 92 per cent in the first quarter of 2012, however Mr Camardelli said that beef export values to the US were up 200 per cent.
 
Mr Camardelli also said that demand for beef was growing in Egypt, Libya, Venezuela and Angola.

[Mustang Sally Farm]

Friday, April 20, 2012

Mexico-US Poultry Talks Collapse

US & MEXICO - Behind the scenes negotiations to settle a poultry anti-dumping case filed by Mexican producers against their US counterparts have collapsed, leaving the trade dispute in the hands of Mexican government officials.


According to The Journal of Commerce, it is unclear what triggered the end of the bilateral talks.
 
Last year, Mexico’s largest poultry producers filed an anti-dumping complaint against US chicken leg quarters, alleging they were being dumped in Mexico at prices lower than they were sold in the US. A Mexican government agency in August made a preliminary finding in their favor and ruled US chicken meat should be subject to an import duty of 129.5 per cent. Although it had the power to do so, the Mexican government did not immediately apply the tariff.
 
Representatives of the US poultry industry spent months trying to negotiate an import quota level with its biggest customer that would allow it to avoid the expense of the trade litigation while retaining access to much of the market.
 
Such a quota does place a ceiling on future growth of US poultry sales in Mexico, but it would allow the trade to continue uninterrupted. In addition to the cost of putting on a legal defense in a trade case, the industry also stands to lose market share if a high duty is imposed.
 
“This system isn’t universally loved, but it is effective,” the industry representative said. “We have that system in place as part of the CAFTA (Central America Free Trade Agreement), and it has worked well.”
 
After the talks broke off, a bipartisan group of 16 senators wrote to US Trade Representative Ron Kirk, urging the US government to intercede and protect the US poultry industry.