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South Korea to Resume U.S. Beef Imports with Restrictions

posted on January 13, 2006

You needn't look farther than the beef industry to see the economic impact of even the hint of food safety issues. And many times, the response of foreign governments appears to be based on perception rather than fact. In the wake of America's first confirmed case of Mad Cow disease late in 2003, Japan closed its borders to U.S. beef. The ban was lifted last month, but even before shipments resumed, the Japanese confirmed their 21st domestic case of Mad Cow disease. While exports account for only about 10 percent of the 35 million head of U.S. cattle slaughtered annually, the closing of America's most lucrative beef export market meant the immediate loss of nearly $4 billion in sales. Other Asian markets also closed their borders in 2003 but not all have lifted their bans on American Beef. This week, trade negotiators had Korea in their sites, and by week's end progress had been made.

South Korea to Resume U.S. Beef Imports with Restrictions

South Korea and the U.S. stretched out a planned two-day talk into a week, in an effort to negotiate conditions under which the Asian country will resume imports of American beef. The country banned imports of U.S. beef two years ago, following the discovery of one case of mad cow disease in Washington state.

One "bone" of contention was literally ... bones. South Korean Agriculture officials voiced concern about accepting any U.S. beef cuts that contain bones. They believe rib products carry a higher risk for bovine spongiform encephalopathy  or mad cow disease. So while the country on Friday did announce it would resume imports of U.S. meat by the end of March, it will not accept beef ribs or any meat over 30 months old.

Prior to the 2003 ban, South Korean officials said 60 percent of the 90.2 (m) million pounds of U.S. beef they imported was rib products.

Resumption of U.S. exports to Korea may add to the optimism already in the domestic market. A DTN analyst says red meat producers will enjoy a continuation of the last two years in the black. The analyst says the safest prediction regarding the 2006 cattle market is beef supplies will be significantly larger... possibly exceeding 2005 by 4 to 5 percent  or nearly 26 (B) billion pounds.

The main reason for the growth is herd expansion  enough to boost the 2006 feeder cattle supply by close to 500,000 head  up 1 to 2 percent from last year.

As for swine, the DTN says it appears commercial pork production in 2006 will probably follow the trend in beef  and continue to grow. With more pigs per litter, more litters per sow, and heavier carcass weights-- total tonnage this year is expected to grow steadily by 2.5% or 21.2 (B) billion pounds.

On the grains side: Informa Economics says revenue is projected to be lower for corn, soybeans and wheat. The firm projects lower yields and lower number of acres for corn with corn prices average at the loan level for 2006.

In soybeans, Informa is confident there won't be the record yields of 2005, but expects planted acres to be up. The company predicts soybean prices dipping below the $5 loan rate by November.

In wheat, Informa says the biggest change will be a one million acre increase in soft winter wheat planting.

In addition to dealing with the world marketplace, and trade agreements (or disagreements), analysts say net farm income will be significantly lower due to higher fertilizer and energy costs.


Tags: agriculture animals beef diseases food safety Korea livestock Mad Cow meat news trade