Japanese beef production is expected to fall again in 2016 as the domestic feeder calf industry contracts further.
The USDA expects 2016 will see a contraction of the Australian cattle slaughter volumes following years of drought conditions that will outweigh higher slaughter weights. MLA expects Australian cattle inventory to decline by 5% on year ago levels in 2016 which they say will drop slaughter rates by 16% and beef production down 13% (on higher slaughter weights). The results will be lower exportable volumes raising the export price.
Australia will still have a tariff advantage over the US, its major competitor in the Japanese beef market. On April 1, Australia's tariff advantage over the US will be 11 percentage points on frozen beef and 8 percentage points on chilled beef.
At the same time, US cattle inventories are expected to rise as grain prices are lower leading to higher slaughter numbers and weights. US cattle inventories were up 3% on year-ago levels as at January 1, 2016 and beef cattle inventories were up 4%.
Japan's domestic cattle slaughter is expected to fall for a fourth consecutive year in 2016 based on the ongoing calf production shortfalls.
Beef demand in Japan will remain under pressure throughout 2016 as ample supplies and lower prices for pork and poultry are expected to be a challenge.
The shortfall in Japan's domestic beef supply is expected to be filled with additional imports. Forecast total beef imports for 2016 are up 2% over 2015 levels.
The report suggests Japan's imports of US beef, therefore, we rise in 2016 by 12% and imports from Australia are expected to shrink by 7%. This would give US a 36% share of the market and Australia a 52% share.
