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Montana Ag Network Report: August 2nd 2019

Posted at 11:08 AM, Aug 02, 2019
and last updated 2019-08-02 13:08:06-04

There are many factors impacting the cattle market as of late. During the Cattle Industry Summer Business Meeting in Denver, the U.S. Meat Export Federation President and CEO Dan Halstrom told the Montana Ag Network that even with the current trade climate across the globe, U.S. beef exports are remaining steady.

“The results for the first five months of this year are pretty darn good,” Halstrom explained. “We had a record last year with 8.3 billion in sales export globally, which was an all-time record by far and we're flat or even with that pace this year. I think we're pretty happy with that.”

Halstrom added that all things considered in the world today there's a lot of upside for the beef market.

“There’s nothing more important than Japan to the U.S. beef industry with 2.1 billion in sales to Japan,” Halstrom added. “Japan is the number one market by far. We need to have a Japan ag agreement. There's momentum here recently. So, we're very excited about that.”

A U.S. Japan trade deal could be announced in the coming weeks. As for China, U.S. beef regained access to that market in 2017. Even with duties on U.S. beef at 37% and the ongoing trade war, Chinese consumers want U.S. beef.

“I think the upside is way bigger than the downside when it comes to China for U.S. beef,” Halstrom said. “There is a rather significant segment of the population that can afford our products. Our product is not the cheapest product, nor do we want it to be, but it is the highest quality product. That's why I say there is a lot upside. The downside of this whole discussion is that there's a lot of moving parts with China. A lot of them have nothing to do with agriculture. This is the frustrating thing.”

China is home to the largest hog herd in the world and to date has lost an estimated 40% of the herd due to African Swine Fever. A new report from Rabo Bank said China's hog herd could be cut in half by the end of the year.

“The reality is we don't know exactly the extent of the problem there,” Halstrom explained. “We do know there's liquidation going on in the pork sector.

Live hogs are short. They're being pulled ahead at least to some degree. So yes, there will be a shortage imbalance of supply there. The question is when. Later this year or early next year? Nobody knows for sure.
Because of the shortage Halmstrom said there is opportunity for U.S. beef producers.

“I think in the end, this spells opportunity for everybody,” Halstrom said. “Poultry, pork and beef. Our numbers would indicate there's not enough production in the world to make up the balance. This is an opportunity for the beef industry for sure.

President Donald Trump plans to begin enacting an additional tariff of ten percent on the remaining $300 billion dollars of products coming from China to pressure negotiators to reach a trade agreement. Talks between the U.S. and China are scheduled again in September.

In other ag news, long-time U.S. House Agriculture Committee member and former Chairman has announced he will not seek reelection.

Representative Mike Conaway of Texas calls his time in Congress “an honor and privilege that I cannot adequately describe.” Conaway told reporters he would be term-limited from continuing his leadership as the ranking member of the House Agriculture Committee, noting little opportunity for leadership positions elsewhere.

Given the situation, he called this "the perfect time" to transition. During his chairmanship, Conaway led the House Ag Committee in crafting the 2018 farm bill. He previously chaired the House Ethics Committee, and currently serves on four committees.