Exports are important to agriculture. That’s simply a fact. And numbers released yesterday help illustrate the necessity of having foreign customers for our region’s best known ag commodity: beef.
The U.S. Meat Export Federation’s latest report shows that, through the first nine months of this year, exports of U.S. beef totaled 926,985 metric tons ̶ a nine percent increase when compared with export totals for the first three quarters of 2016. Good news, there. But some other numbers give us deeper insight into the relevance of beef exports when it comes to the ability of cattlemen to make a profit.
During the month of September, according to USMEF analysis, the value of beef exports averaged $289.14 for every head of cattle sold by feedlots across the country. Essentially, that dollar figure is what USMEF arrives at in estimating how much foreign consumption of beef enhances the total value of an individual animal. When exports grow, the law of supply and demand works out better for cattle sales.
Now, here are some numbers that I came up with to amplify what that $289.14 really means. (Note: I’m rounding some numbers here for simplicity’s sake. But I’m reasonably confident my math is not too fuzzy.) If we take the average feedlot animal at the time of its sale to a packer, you have an animal that will weigh somewhere around 1,350 pounds. During the month of September, such an animal sold for about $1.10 per pound. That means, an average bovine coming out of a feedlot had a value of somewhere around $1,450. If we go with $1,450 as a good working example, we see that that $289.14 equates to about 20 percent of the animal’s value.
When it comes to achieving profits in a feedlot, margins can be incredibly tight. Depending on market conditions, profits of $50 to $100 a head can be considered good. Losses in similar amounts on a per head basis are not uncommon. Thinking of it in those terms let’s us see that $289.14 per animal is pretty significant. The boost cattle values derive from exports can easily be the difference between making decent profits or incurring losses.
If you’d like to see more data about U.S. beef exports and what countries are our leading customers, go here: http://www.usmef.org/downloads/statistics/2017-09-beef-plus.pdf
I’ll blog more about exports in the future. In the meantime, if you have something you’d like to say about ag trade, email me at email@example.com.