With domestic beef supplies shrinking due to drought and the price of imported beef on the rise, beef demand in Mexico faces significant headwinds. While Mexico has maintained its status as the leading volume destination for U.S. beef in 2012 and ranks No. 2 (to Canada) in value, it is important to recognize the economic obstacles Mexican consumers are facing and work to maintain their interest in U.S. beef as a high-quality, affordable protein choice.
To help address this issue, USMEF recently conducted beef pricing seminars in Monterrey, Nuevo Leon and Mexico City to inform U.S. beef importers, distributors and processors about the current and near-term scenario for beef prices in the United States and Mexico. This information is designed to help them make better purchasing decisions and deliver a wider and more affordable range of product choices to their customers. This series of seminars was made possible through support from the Beef Checkoff Program. Importer Comercial Norteamericana (COMNOR) was a major participant in the seminars, inviting its main retail and foodservice customers in these regions.
“The beef pricing seminars allowed USMEF to reinforce ties with important clients in Mexico, many of whom have concerns about the availability of U.S. beef cuts that fit their customers’ price range,” said Chad Russell, USMEF regional director for Mexico, Central America and the Dominican Republic. “We have developed a loyal clientele for U.S. beef in Mexico, but we have to address these concerns if we are going to continue to effectively serve the market.”
The strength of the Mexican peso is a critical factor when it comes to demand for U.S. beef, and this has presented a challenge in 2012. After staying in the range of 11.6 to 12.2 pesos per dollar through much of 2011, the peso has weakened to more than 12.5 pesos per dollar since early September – even falling to 14 pesos per dollar in late May, its weakest level since early 2009. In July, the exchange rate has been mostly in the 13 to 13.5 pesos per dollar range.
“The recent stabilizing of the peso is helpful,” Russell explained. “But in terms of regaining the purchasing power it carried prior to the economic crisis that took hold in late 2008, the peso has a long way to go. That’s why it’s very important to help our clients obtain as many affordable cuts as possible.”
While U.S. beef enjoys reasonably favorable market access conditions in Mexico, exports are still limited to beef from cattle less than 30 months of age. Ground beef, small intestines, head meat and weasand meat are ineligible regardless of cattle age. Mexico only recently began accepting imports of beef feet and sweetbreads.
“Access for all cuts from cattle of all ages would help address the supply situation, but unfortunately we don’t see a change in that policy coming in the near term,” Russell said.
Through May, this year’s beef/beef variety meat exports to Mexico totaled 88,385 metric tons (194.8 million pounds) valued at $385.6 million. While this was a 15 percent decline in volume, export value was down only 2 percent from last year’s pace.