Livestock Marketing

Livestock Market Comments
Increasing Slaughter Cattle Exports to Mexico

February 10, 2017                                      Volume 12, Number 6

David P. Anderson1 and Charley Martinez2
1Professor and Extension Economist           2PhD Student
Livestock and Food Products Marketing


 

For some months there has been talk of Texas cattle feeders receiving bids for fed cattle from Mexican packers.  Looking at the trade data indicates that slaughter cattle are moving South after many years of no trade.  USDA AMS reports weekly cattle imports from and exports to Mexico.  U.S. producers routinely export beef cattle breeding stock and dairy cattle to Mexico.  But no slaughter cattle exports were reported from the week ending December 20, 2003 until the week ending October 1, 2016.  Exports ramped up from 40 head during the first week of October to 684 head the week ending December 8, 2016.  Through February 2, 2017, 1,494 head of slaughter cattle have been shipped to Mexico.  Just over 2,200 head were exported in all of 2016.

In the late 1990s and early 2000s significant weekly shipments occurred.  Weekly shipments ranged from about 1,000 head to 3,500 head.  Slaughter cattle exports had declined substantially well before late December 2003 when the Canadian cow in Washington was found with BSE.  High U.S. fed cattle prices in 2003 likely depressed exports to Mexico (fed cattle prices set a record high in the fourth quarter of 2003 that was not surpassed until 2010).

Growth in packing capacity in Mexico and a lack of cattle are encouraging export shipments.  This growth in exports has occurred while the peso has devalued sharply against the dollar since early November.  The drop in peso value should be a headwind against U.S. exports.  The lower peso will likely encourage shipping Mexican feeder cattle to the U.S.  The changing structure of the market in Mexico – more feeding and packing capacity and increasing beef exports – will be an interesting market phenomenon this year.  More buyers bidding for South Texas fed cattle is a positive price development for those feeders.

 

 

 

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