In some ways, speculation about when Japanese beef trade would resume has had more impact on price than when the market actually opened.
“Trade resumption has been supportive to prices, but it hasn't necessarily moved them much higher,” says Mike Miller, Cattle-Fax director of research and education.
For one thing, best-case projections for beef exports to Japan this year are too low to push the market fundamentally.
The U.S. Meat Export Federation (USMEF), for example, projects 2006 exports will be around 100,000 metric tons (220 million lbs.). That's about 27% of the 300,000 metric tons exported pre-BSE in 2003 when beef and variety meat exports to Japan tallied $1.4 billion.
Cattle-Fax is slightly more bullish, projecting 250-300 million lbs. of beef exports to Japan in the coming year.
Even though the impact on demand runs deeper than the carcass equivalent of 300,000 head or so — as only pieces and parts of carcasses head to Japan — it's still a drop in the proverbial pail. The U.S. produced approximately 25.5 billion lbs. of beef in 2005, with 2006 projected to be even larger.
“I think trade resumption will be supportive to us through the year, with the most support coming in the first 60-90 days of 2006… We believe export volume will build throughout the year to the highest levels in late summer and early fall,” Miller says. While still supportive, he explains it won't overcome increasing beef supplies.
Besides, any emotion-based bounce in the market seems to have occurred long ago when periodic reports suggested imminent resolution to the trade dispute. Negotiations were so protracted that many began viewing them as just one more cry of “wolf.” Jim Gill, Texas Cattle Feeders Association marketing director, reports folks in his marketing area just started ignoring the rumors.
“Certainly trade resumption is positive, and it sure doesn't hurt anything, but I haven't seen it make any difference in the cash market,” Gill says.
Likewise, reports from various cattle feeders indicate packer demand for age-eligible cattle — only beef from cattle 20 months of age and younger can be exported — is also limited. Thus far, premium claims hover around $25/head. This is early on, too, when the supply of cattle with the requisite documentation is presumably the thinnest.
On the other hand, trade resumption occurred at a traditionally slow time of the U.S. marketing year. A clearer picture should form as the public emerges from holiday hibernation. If Japanese demand outstrips available supply, age premiums should be easier to come by.
Will consumers buy it?
The big question is will Japanese consumers embrace beef once again in general terms, and rediscover their appetite for U.S. beef specifically?
As of early January, exports were still a trickle, less than some exporters had hoped, Miller says. Reports leading up to trade resumption trumpeted Japanese surveys that indicated the majority of Japanese consumers were wary of U.S. beef.
“In our survey work, most Japanese consumers we visited said they would consider a government announcement to end the ban the ‘all clear,’ and would likely return to eating U.S. beef,” says Lynn Heinze, a USMEF spokesman.
According to Heinze, one of Tokyo's two largest retail chains — 113 stores — was confident its newly-arrived 6 metric tons of U.S. beef would sell out during a USMEF promotion Dec. 26-29.
“The offering so far has been from relatively limited air shipments,” Heinze explains. “Product should arrive over the water by mid-January, and this will provide additional information.”
Incidentally, Miller notes one of the challenges of gauging exports' steam as they pick up is USDA's export numbers, which are released two months after the fact. Ship it today, and it won't show up for at least 60 days in reports the industry uses to measure international demand.
Keep in mind, recapturing Japanese demand for U.S. beef is as much about recovering Japanese demand for beef, period. According to USMEF, per-capita beef consumption in Japan declined 10% in the two years U.S. product was banned. At the same time, Australia captured a larger share of the remaining market.
“We will rebuild consumer confidence using consumer education and by working closely with the Japanese trade,” explains Phil Seng, USMEF president and CEO. “We are committed to assuring Japanese consumers U.S. beef is safe, and they can enjoy it without hesitation.”
Hopefully, the majority of Japanese consumers will have the same attitude as the Japanese shopper who, upon purchasing some of the first U.S. beef available, said: “They are eating [beef] in the U.S., and I have no hesitation eating it, too.”