STILLWATER, Okla. (RFD News) — President Trump’s reported plan to increase beef imports as a way to lower beef prices is currently on hold, but Oklahoma State University livestock economist Dr. Derrell Peel says the move likely would not have much impact on the market.
Peel says the U.S. is already importing large amounts of beef because of tight domestic cattle supplies and elevated prices, adding that the market is currently bringing in about as much imported beef as it wants.
“If you look at the imports, obviously we are importing a lot of beef in this environment with tight supplies in the US and high prices, but we’re importing about as much as the market wants right now. All of the indications are that market forces are at work here. Imported beef is coming in. It’s not priced at the exact same level as US domestic beef, partly because it’s a frozen product, partly because it’s used in specific ways. And so, lowering the tariffs won’t necessarily stimulate a lot more imports. It’s certainly probably not enough to have much impact on beef prices in the U.S. If it did have any impact, it would be in that ground beef market, that lean processing beef market. But even there, it looks to me like there’s really nothing preventing us from importing as much as we want. And I think we’re getting that now. So I don’t think this would change things very much.”
Peel says the proposal appears to be driven more by political messaging than meaningful market intervention.
When it comes to long-term efforts to lower beef prices, Peel says rebuilding the U.S. cattle herd remains the biggest factor.
“The signals are there. The market’s providing high prices and incentives to do that. We haven’t responded appreciably yet. We’ve got lots of challenges going forward that I think are slowing down that process. One of which, frankly, is uncertainty relative to policy and political postures. This doesn’t help producers have firm plans or ideas about what to expect going forward. And you combine that with drought threats and, you know, the overall cost of capital and other issues that producers are facing. It’s a slow process and there’s nothing you can do to speed that up. It’s a 2 to 4 year process. And in the meantime, it means that we’re actually going to take tight supplies and make them even tighter because we’re going to have to hold back some heifers at some point and keep them for breeding.”
USDA’s next Cattle on Feed report is scheduled for release next Friday, May 22nd and could provide another look at herd rebuilding efforts and overall cattle supplies.
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