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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

According to the CME Daily Livestock Report, a number of press reports have indicated that Japanese authorities may be close to lifting some of the restrictions on beef trade, a decision that could have a significant impact on US beef exports to that country. In October there were reports that the Japanese government may raise the cattle age limit for U.S. beef exported to Japan from the current 20 months or younger to 30 months or younger. Prime Minister Yoshihiko Noda will likely make an official announcement on the easing of import restrictions in a meeting with U.S. President Barack Obama at the Japan-U.S. summit meeting scheduled for November.

US beef shipments to the Japanese market have increased steadily in recent years but remain only a portion of what they were prior to the BSE related ban. In 2010, US beef exports to Japan were estimated at 351 million pounds (carcass wt. equivalent CWE) compared to 918 million pounds in 2003.

The current estimate is that US beef exports to Japan in 2011 could be around 475 million pounds (CWE) and account for 15.9% of the overall beef supply in the country. Should Japanese officials lift restrictions on US beef in 2012, we could see US beef shipments rise steadily for the next two to three years and eventually approach the levels we saw back in 2003.

It is conceivable that the decision could add another 120 million pounds to US beef trade with Japan in 2012 and probably another 150-200 million pounds in 2013.

While the US could displace some Australian beef, we think that the entry of grain fed US beef will largely increase the overall beef supply in Japan. Keep in mind that Japanese beef consumption in 2011 is estimated to be about 10% lower than in 2003, in large part due to the absence of US beef.

In other words, the lifting of restrictions will tend to make the size of the market larger rather than “take” volume away from current suppliers such as Australia. Higher seafood prices, a staple in the Japanese diet, will further support higher consumption and thus larger US beef inports.

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