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Mexico-U.S. Beef Trade Reflects Changing Market System

Mexico-U.S. Beef Trade Reflects Changing Market System
U.S. imports of Mexican beef increase while exports to Mexico are on the decline

The amount of Mexican beef coming into the U.S. is accelerating while exports to Mexico are at a steep decline, reflecting changing market systems in Mexico, said Oklahoma State University livestock marketing specialist Derrell Peel.

Since just 2009, U.S. imports of Mexican beef increased by 268% to make Mexico the fourth-largest source of U.S. beef imports.

"Beef exports to the U.S. represented slightly more than 40% of total Mexican beef exports in 2012," Peel said. "U.S. imports of Mexican beef are up again so far in 2013 and are on pace to increase another 30% by the end of the year."

U.S. imports of Mexican beef increase while exports to Mexico are on the decline

Most of the beef imported from Mexico is middle meats originating from fed cattle. Peel said the dramatic increase in Mexican beef exports is the result of a rapid conversion of the Mexican beef industry from a carcass to a boxed beef marketing system.

That change has opened up domestic and international beef markets, though it's not clear just how big those markets can get. Peel said, however, that there remains additional room for growth.

On the flip side, U.S. exports of beef to Mexico have declined since 2008 and are decreasing again in 2013.

"Since 2008, the combination of higher U.S. beef prices and exchange rate effects has made our beef more expensive in Mexico, and is undoubtedly the major reason for declining U.S. beef exports to Mexico," Peel said.

However, Mexican beef prices have risen sharply in the past 18 months and domestic beef prices in Mexico are once again close to U.S. beef prices. Peel suggests this may help stabilize U.S. beef exports to Mexico in the second half of the year.

"Be aware that high beef prices in Mexico are curtailing consumption, making it difficult to anticipate much increase in beef imports from the U.S. with both domestic and imported beef in Mexico at record price levels," he said.

A likely scenario is for U.S beef exports to Mexico to level off and possibly recover some of the recent declines, given expected domestic beef production declines in Mexico during the next few years.

Source: OSU

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