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Beef approved for China

2K views 11 replies 5 participants last post by  Allen W 
#1 ·
Knowledge is power, and here is some info that might help you guide the farm to profitability.
China's middle class is about the population of everyone in the US. They just approved allowing US beef into China, after concerns over Mad Cow. That is enough increased demand to drive up US prices for beef, on the hoof and on the BBQ.
On a more local note, a big Pennsylvania slaughter facility was recently, unexpectedly and temporarily, shut down and the thousand cattle awaiting slaughter there were trucked to Michigan slaughter facilities. Michigan beef prices should drop due to this temporary increase in supply.
 
#2 ·
I wonder how long before we can see real increases in cattle prices from the China deal (if we haven't already?). We have 5 or 6 steers that can go to sale but I was going to hold them over winter (we have plenty of hay) to sale when spring prices come up. If prices increase enough, I would be willing to send them on in a few weeks.
 
#3 ·
In Michigan, there is a shortage of hay. Some areas too dry, others too wet. Perhaps other places had trouble, too. Hay shortage generally results in increased numbers of cattle sent to auction. That, in turn, lowers price paid. I'd think feeding your cattle through the winter would result in higher prices in the Spring. Hay prices spike a few weeks prior to pastures greening up and then drops when cattle go out on pasture. Conversely, more people market cattle as hay supplies run low in Spring, but everyone wants cattle when pasture greens up, driving up the prices.
 
#5 ·
Yes. While the beef market is heavy into cattle futures, forward selling to stabilize the price and prevent spikes, human nature will have a big effect.
As demand for a set quantity of beef increases, prices will edge higher. Higher prices increases profits. More people will be drawn to this profitable enterprise, artificially increasing demand. Folks with a bit of pasture will try to beat the price hike and enter the market, buying calves. Prices for calves increases, along with profits. Cow calf operations will hold on to heifers to increase their future number of calves to sell at this elevated price. That cuts the supply of feeder calves to market. The reduced supply further pushes prices up. This triggers higher prices.
 
#6 ·
We'll never see a price increase for cattle that can be directly tied to our reentry into the China market. It will be absorbed over time as we move into the market. One big question I seen about the Chinese market was how much American beef was already going into the market through other surrounding countries.

Just keep your currant market plan and keep moving forward.
 
#7 ·
The price paid/offered for every bovine is tied to the number of cattle exported somewhere. Every bovine leaving the US food chain to be eaten elsewhere impacts the value of every steer, every pound of T bone and every bar burger. Simplest form of capitalism: Supple and Demand.
While your local auction may not have an export buyer there, but just the removal of cattle to overseas buyers elsewhere increases prices locally.

I find it ludicrous to think there has been US beef secreted into China from other nations. If we were to ban the sale of US beef into China, I'd guess there could be some black market movement of US beef through other countries. But in this case, the Chinese didn't want our beef out of fears that it might be tainted with Mad Cow.
 
#8 ·
#10 ·
The Futures contracts over the next year are down. No way, short of a crystal ball, to know if those holding futures contracts for a year from now will be above or below the market at that time.

If a farmer normally markets 1000 feeder calves, saving back 100 heifers and marketing 100 cull cows, but the hay is short or the price is down, so he markets 1100 feeders, holding none of his heifers, while culling 200 cows, he depresses the market by this increased supply. Loss of an export market depresses it further.

But, if this same farmer thinks the prices will go up or he has access to more hay, (lower corn prices and higher hay prices shifts production from corn to hay) he may market 500 steers and hold all 600 of his heifers and cull only 50 cows, building his herd. So, higher beef prices, brought on by increased demand, spurs expansion of breeding. Expansion reduces the number of feeders that are on the market, further reducing the supply, increasing the price. The thought of a shortage or increase in price creates a shortage and increase in price.

Beef from South America to the US has been cut off due to sanitation issues. When they get that worked out is anyone's guess.

Since China has access to beef from South America and Australia, it makes the idea of smuggled US beef implausible, to me.
 
#11 ·
USDA Audit Shows Deficiencies in Brazil's Meat Inspection System
National Law Review
November 17, 2017

As previously covered on this blog, Brazilian federal police raided several meat producers earlier this year for allegedly doling out bribes to inspectors to certify meat that was either rotten or tainted with Salmonella. Following the bribery scandal, USDA's Food Safety and Inspection Service (FSIS) instituted 100% point-of-entry re-inspection of all Brazilian meat products imported into the United States and - since then - has refused entry to approximately 1.9 million pounds of Brazilian beef products due to public health concerns, sanitary conditions and animal health issues. In June of this year, USDA Secretary Sonny Perdue announced the suspension of all imports of fresh beef from Brazil because of recurring concerns about the safety of the products intended for the American market. The suspension of shipments will continue to remain in place until the Brazilian Ministry of Agriculture takes corrective action which the USDA finds satisfactory.

A newly released USDA report identified a number of deficiencies in Brazil's meat inspection system that the Agency discovered during its onsite equivalence verification audits of Brazilian establishments conducted from May 15 to June 2, 2017. The audits were conducted to determine whether the country's meat inspection system remains equivalent to that of the United States, with the ability to export products that are safe, wholesome, unadulterated, and correctly labeled and packaged. Key findings of the USDA audit include:
Brazilian authorities failed to establish procedures to prevent conflict of interest between inspectors and meat plants,
Sanitation requirements in plants were not enforced adequately to prevent product contamination
Post-mortem inspection procedures were "inadequate" to ensure that only "wholesome carcasses, free of contamination and defects receive the mark of inspection."
Brazilian authorities have failed to develop procedures to standardize the assessment of competence and performance of in-plant inspection personnel assigned to United States-certified establishments; and
Official methods of chemical analysis used by the government laboratories is inconsistent with FSIS requirements.


Full text:
https://www.natlawreview.com/article/usda-audit-shows-deficiencies-brazil-s-meat-inspection-system
 
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