We noted in last week’s Export Newsline that there was a strong possibility that the quarterly allocation of the European Union’s duty-free high-quality beef (HQB) quota would be filled prior to Sept. 30. The quota is deemed “critical” when 90 percent of the available quantity (12,050 metric tons) is utilized in each quarter, at which point importers must open a guarantee with EU customs for 100 percent of the full duty for each container presented.
According to the latest report from EU Customs, the quarterly allocation has effectively reached the critical phase. In order to clear new shipments at zero duty, importers must now either open a bank guarantee or wait until the next quarter begins (Oct. 1) to clear the product. If you have questions about this situation, please email Thad Lively or call 303-623-6328.
While EU imports of U.S. beef have expanded every year under the HQB quota, imports of Australian and Uruguayan beef have recently grown at a faster pace. Australia and Uruguay combined to account for 57 percent of total imports under the HQB quota in the 2013-2014 quota year (which ended June 30), and continued growth means the quota will be fully utilized for the first time this year. Meanwhile the U.S. share of imports under the quota dipped to 43 percent in the 2013/14 quota year. The weakening euro adds to the challenge for U.S. beef, since it is priced significantly higher than beef from other suppliers eligible for the quota.
Meanwhile EU cattle prices have been in a downward spiral, due in part to Russia’s Aug. 7 import ban. Russia was the EU’s largest beef/beef variety meat export market in the first half of this year at 45,890 mt (+79 percent from a year ago) valued at $135 million (+53 percent). These results included large export growth in frozen beef (15,416 mt, +120 percent) and variety meat (23,633 mt, +102 percent), offsetting a modest decline in exports of chilled beef (6,570 mt, -4 percent).
EU cattle prices continued to drift lower in early September, with prices for Irish steers down 13 percent from a year ago to $207.71/cwt, and lower than U.S. prices since early June. EU average young bull prices were down 15 percent year-over-year and cow prices were down 9 percent.