Attempting to explain international trade is complicated because many factors affect trade flows of agricultural commodities, including beef. But to try to simplify beef trade a few important factors include general economic conditions, exchange rates, government policies, and changing beef production and price levels in the many beef importing and exporting countries.

The U.S. is a major participant in the world beef market because we are the largest beef producer, largest consumer, second largest importer behind Russia, and the third largest exporter behind Australia and Brazil.

Some reasons for USDA projecting more imports and less exports in 2012 are the strengthening value of the $U.S.; lower U.S. beef production, especially cow beef; higher U.S. beef prices; and increasing beef production and expected increases in exports from Australia.

The USDA Economic Research Service (ERS) released the latest beef trade data, which is through April, on June 11.

Cumulative beef exports on a carcass weight basis through April were down about 10.5 percent from last year's record levels. However, due to higher beef prices the year to date value of exports was almost 5 percent higher than last year.

The top four destinations for beef exports in 2011 were Canada, Mexico, Japan and South Korea. Exports to all of those countries were down over last year. However, increases of 40 percent to Vietnam and 67 percent to Russia were recorded.

U.S. beef imports through April were 22 percent higher than last year. The top three sources of U.S. beef imports in 2011 were Canada, New Zealand, and Australia.

Australia was the leading provider of beef to the U.S. until 2008 when it fell to second place through 2010 and to third place in 2011. A drought in Australia caused beef herd liquidation but rebuilding has now taken place.

Imports from Australia were up 74 percent through April and Australia is poised to regain second place and possibly first place status in 2012.

Imports from Canada were up 9 percent with New Zealand up only 3 percent.

Even though more beef imports and less exports are predicted for 2012, that won't be enough to offset the expected 3.3 percent decline in beef production that the Livestock Marketing Information Center (LMIC) is predicting.

The LMIC projects about a 2 percent decline in 2012 per capita beef consumption, which is one of the factors supporting current cattle prices. Fed cattle prices are 9 percent above last year at this time, with cow prices about 25 percent higher, and depending on the geographic region feeder cattle and calves are 20 to 35 percent higher.

The markets
The fed cattle market was lower last week. Five-area fed steer prices on a liveweight basis averaged $119.52 per hundredweight, down $3.27 for the week. Dressed weight prices declined $4.22 for the week to average $191.33.

The Choice boxed beef market strengthened 72 cents to close at $197.82. The Choice-Select spread continued to exhibit above average seasonal strength, and ended the week up $3 at $15.62.

Feeder cattle and calf prices were mixed and affected by some reported forced selling in dry areas and seasonally declining receipts and variation in quality at some markets. Corn prices in Omaha on Thursday increased 14 cents per bushel from the previous week to $6.42, and distillers grain prices strengthened as well. 

—From Livestock Marketing Information Center's In the Cattle Markets