US beef exporters are confident they will send record beef shipments to Japan when import restrictions in place since the BSE detection of 2003 are possibly relaxed later this year.
The possible protocol change would see US beef exports to Japan climb to a predicted 160,000 tonnes shipped weight, an increase of 35 percent on 2011's estimated 118,300 tonnes.
The renewed US push into Japan will most likely come at the expense of Australian volumes, which are forecast to total 330,000 tonnes in 2012, down 4pc on 2010.
The US increase will come if Japanese legislators allow in beef from US cattle aged less than 30 months, rather than the current less than 21 months age restriction.
Despite forecasts from Meat and Livestock Australia this week that cattle prices on the local market would hold up in concert with a beef production surge, talk of a reinvigorated US presence in Japan and Korea continues to weigh heavy on an already subdued Australian cattle market, which this week is witnessing spiralling prices and tough weather conditions in Queensland and NSW.
After Wednesday's markets the Eastern Young Cattle Indicator (EYCI) was 15c lower for the week at 390.25c/kg carcase weight. Trade steer prices lost 9c - to 199c and feeder steers were 11c lower on 207ยข/kg live weight (lwt). Heavy steer prices were firm settling on 7c lower on 181c and medium cows were back 3c to 144c/kg (lwt).
Increased competition from US beef isn't the only headwind currently facing Australian exporters, with the high Australian dollar against the 'greenback' applying significant pressure on sales.
According to MLA chief economist Tim McRae, accentuating the impact of a possible change to the US beef age requirements will be the continued weak US currency, aiding the price competitiveness of US beef in the Japanese market.
"In 2011, the US dollar depreciated 9pc against the Japanese yen, while over the same period the A$ appreciated 2pc,"he said.
"Additionally, US beef exporters have been actively striving to capture a higher profile for their product throughout the past 12 months."
The snapshot of the current climate in Japan is part of an overall picture of US resurgence in beef globally, with the Denver-based US Meat Export Federation predicting the US may ship a record 974,000 tonnes of beef in 2012, worth about US$5.13 billion, compared with an estimated 914,500 tonnes in 2011.
Concern is also focused on South Korea, where the US will also press home its advantage after signing a free trade pact with Australia's third largest beef export customer last year. The deal will see a reduction in import tariffs of as much as 40 percent over the next 15 years.
The US supplied 68 percent of South Korea's beef imports in 2003, dropping to zero the following year, according to data from the Korea Meat Trade Association. Shipments recovered to 99,047 tonnes in the first 11 months of 2011, accounting for 37 percent of imports, data shows.
MLA says the situation facing Australian beef into Korea in 2012 is expected to become more difficult, as local production rises, the high stocks are cleared and the US ramps up its efforts to recapture market share - buoyed by its Free Trade Agreement (FTA), weak currency and an ability to deliver the product most sought after by Korean importers - short ribs.
Hence, Australia's competitive position in Korea is set to be further challenged in 2012.
Australian beef and veal exports to Korea greatly exceeded expectations for 2011, increasing 18pc on the previous year, to 146,347 tonnes - falling just short of the record 149,663 tonnes in 2006.
"This growth reflected strong Korean consumer demand and weaker competition from Japan for suitable cuts. Korean consumption of local, US and Australian beef all grew significantly in 2011," Mr McRae said.
Total Australian beef exports in 2012 are expected to decline 15pc on 2011, to 125,000 tonnes.
In other developments, Canada's Trade and Agricultural Ministers announced late last week that Korea will lift the ban on Canadian beef imports as reported in the Wall Street Journal. Canadian Prime Minster, Stephen Harper, is reportedly confident that Korea's decision on beef will also help in finalising the long delayed Canada-Korea Free Trade Agreement.
Korea banned Canadian beef imports in 2003 due to BSE outbreaks in the country. Similar to the current restrictions on US beef, Korea will only allow beef from Canadian cattle less than 30 months of age. Canada Beef Inc. stated that the Canadian beef industry is positioned to export about 6500 tonnes shipped weight (worth $30 million) to Korea by 2015 - which with current import levels would give Canada 2pc market share.
Korea is also sustaining significant internal pressure to source its beef locally. With local Hanwoo cattle prices under significant price pressure due to perceived oversupply, the Korean Ministry for Food, Agriculture Forestry & Fisheries (MIFAFF) announced last week that it is planning to replace all imported beef supply for the Korean military with local, domestic Hanwoo beef.
They said that current 60 grams of pork supply per soldier will be decreased by half and the 30 grams will be replaced with Hanwoo and Korean beef supplies.
Korean beef producers held a rally last week to urge the government to come up with measures for countering plunging beef cattle prices.
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