The lower beef exports and higher beef imports into the US are slowly reversing as conditions change.

This is very important because international trade of cattle and beef is a significant buffer that reduces drastic market swings in US markets.

Increased beef production, a somewhat weaker dollar, and lower prices in 2016 are slowly and unevenly improving US beef exports and decreasing imports to the US.

In 2014 and 2015, record high US prices, reduced supplies had the expected effect of stimulating beef imports and cattle imports while retarding beef exports. A strong US dollar exaggerated those effects both ways. Increased beef imports augmented supplies of beef, especially supplies of lean processing beef (primarily for ground beef) and moderated what would have been an even more extreme impact on domestic demand in a period of record prices. Beef exports decreased as record high prices rationed demand in both the domestic and international markets.

Increased beef production and lower prices in 2016 is reversing those impacts. US beef exports are recovering, albeit rather slowly and unevenly. July beef exports were up 8% to all destinations. Year to date beef exports are up 3.1% with year over year increases to Japan, Mexico and South Korea. Exports to Canada and Hong Kong are still down year over year though Hong Kong posted a year over year increase for the month of July. The dollar has moderated against several currencies, the Japanese Yen in particular, but still represents a headwind for beef exports.

Beef imports were down 6.8% for the month of July with the year-to-date total down 12.1%. Imports from Australia have been down sharply every month this year and are down 31.2% for the first seven months this year. Beef imports from Australia increased the most the past two years as record high US prices coincided with drought-forced liquidation in Australia that increased short-term beef production.

Imports have also decreased from Brazil for the latest monthly data and for the year to date. Other beef import flows are in flux with Mexico down in July but still up for the year to date. By contrast New Zealand, Nicaragua, and Uruguay were all up in July but are still down for the year.

Beyond short-term market conditions, trade flows are impacted by longer-term conditions in various countries, and structural changes that alter the long-term trajectory of beef and cattle trade flows.

For example, China has emerged as the second-largest beef importer in recent years as consumption exceeds beef production; making China a global beef market participant for the first time. The US does not yet have direct access to the Chinese market but the impacts are already evident in global markets and are expected to continue to grow.

Closer to home, Mexico’s growth in beef production and processing and growing exports has a number of direct impacts on the US market. In 2015, roughly 90% of Mexican beef imports moved to the US, making Mexico the fourth largest source of beef imports in the US At the same time, increased demand for Mexican cattle in Mexico is reducing the flow of Mexican feeder cattle to the US Cattle imports from Mexico were down 54.1% year over year in July and are down 20.9% for the year date. This is likely a permanent or at least a long-lived decrease in Mexican cattle exports.

Decreased beef imports and growing beef exports will play a central role in stabilizing cattle and beef prices in the US as production expands in the coming years.

Along with domestic beef demand, international demand for US beef will determine just how big the US beef industry needs to be as it grows. More than just total tonnage, beef exports and imports are critical in balancing the supply and demand of specific beef products. This helps maximize the value of every beef carcass in the US market.

Peel is Oklahoma State University Extension livestock marketing specialist.