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Global Uncertainty In Animal Markets Clouds US Trade Prospects

by 5m Editor
12 September 2006, at 6:08pm

US - Uncertainty continues to shape the forecasts for animal products markets in 2006.

USDA Economic Research Service

Potential and actual animal disease outbreaks, consumer sensitivities, volatile exchange rates, and growing competition from producers in other countries cloud U.S. trade prospects for major meats. Loss of U.S. trade market share, partly caused by disease outbreaks and related trade restrictions that have affected animal product exports since 2003, compounds the problem.

The outlook for U.S. meat, poultry, and dairy markets in 2006 depends on how well domestic production adjusts to changes in input costs, the effect of exchange rates on trade, the continuing effects of disease and trade restrictions on exports, and the increasing competitiveness of emerging animal products exporters.
Vulnerability and volatility shape the forecasts for animal product markets and trade in 2006 and beyond. The Animal Products Market report examines how potential and recent actual animal disease outbreaks, shaken consumer confidence, volatile exchange rates, and growing competition from producers in other countries affect U.S. trade prospects for major meats.

Animal product producers in Australia, Brazil, and Argentina compete with U.S. producers for export market share, but they, too, face a number of limitations. On the one hand, feed grain constraints limit Australia’s production of fed beef and thus its potential in satisfying the lucrative Japanese beef market. The United States was kept out of the Japanese market for over 2 years because of disease restrictions related to bovine spongiform encephalopathy (BSE, mad cow disease). On the other hand, Brazil and Argentina have ample feed, but exports to Japan are restricted by their own disease-related issues. In addition, Argentina imposed a beef export ban, which, while aimed at controlling domestic prices, excluded Argentine beef from most international markets.

Changes in input costs also create challenges. Corn is one of the primary ingredients in animal feed and often accounts for a significant portion of production costs. With higher energy costs and greater emphasis on ethanol as an alternative fuel, corn prices are forecast to rise significantly in 2006. Although distiller’s grain, a byproduct of ethanol production, is used in animal feeding, it is by no means a perfect substitute, and its use is limited, especially for poultry and hogs.

The outlook for U.S. meat, poultry, and dairy markets in 2006 depends on how well domestic production adjusts to changes in input costs, the effects of exchange rates on imports and exports, the continuing effects of disease and trade restrictions on exports, and the increasing competitiveness of some emerging animal product exporters.

Further Information

Animal Products Markets in 2005 and Forecast for 2006

ThePoultrySite News Desk

5m Editor