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0713mk-us-mexico.gifChanges in Mexico-U.S. Cattle and Beef Trade Flows

The latest livestock trade data provides additional indication that the Mexican cattle industry is undergoing rapid and dynamic change. Changes in cattle and beef flows between the United States and Mexico have significant implications for the cattle industries on both sides of the border. The newest component of the increasingly complex and integrated U.S.-Mexico cattle and beef industries is the rapidly growing imports of Mexican beef into the United States.

U.S. imports of Mexican beef have increased rapidly during the past four years, resulting in Mexico becoming the fourth-largest source of U.S. beef imports. However, imports of beef from Mexico for the month of May were down just more than 4% year over year. This may not signify a new trend, but it is significant as it represents the first decrease after 48 months of double-digit year-over-year increases. It raises the question of whether imports are slowing because of demand limitations for Mexican beef in the United States, or because the supply of beef in Mexico is limited and high domestic prices are reducing the economic incentives to export beef? Data to answer the question is not complete, but there are indications in the U.S. beef export and cattle import data.

U.S. beef exports to Mexico have been decreasing since 2008. For most of the intervening period, a combination of high U.S. beef prices and a weaker Mexican peso have made U.S. beef more expensive in Mexico and limited U.S. beef movement into Mexico. Mexican beef prices have risen significantly during the past 20 months to catch up with U.S. prices and bring domestic beef prices closer to a balance with imported beef prices. Though U.S. beef exports continue to fall, the decrease the past two months has been less and may indicate that U.S. beef exports to Mexico will stabilize. U.S. beef exports were down an average of 12% year over year for the past two months compared to average decreases of nearly 36% for each of the preceding 11 months.

More evidence that the supply of cattle and beef in Mexico continues to tighten is in the data on Mexican cattle imported into the United States. Mexican cattle exports increased in 2011 and the first half of 2012 as strong U.S. markets and severe drought in northern and central Mexico forced significant cattle liquidation. Despite dropping sharply in late 2012, total Mexican cattle imports for the year totaled nearly 1.5 million head. This total included more than 384,000 spayed heifers, much more than typical. In fact, U.S. imports of Mexican steers were actually down in 2012.

So far in 2013, total imports of Mexican cattle are down nearly 43%, more than 406,000 head, compared to last year, based on weekly data through the end of June. Mexican heifer exports to the United States are down more than 57% year over year for the year to date.

It appears that in Mexico, much as has happened in the United States, significant female liquidation has occurred the past several years. Mexican beef production, cattle exports and perhaps beef exports may be curtailed for the next couple of years at least.

Editor’s Note: Derrell S. Peel is a livestock marketing specialist with Oklahoma State University Extension. This article was first published in the Cow-Calf Corner newsletter provided by the Oklahoma Cooperative Extension Service.

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