CME: US Beef Exports to Korea Expected to Resume

US - CME's Daily Livestock Report for 21st May 2008.
calendar icon 23 May 2008
clock icon 2 minute read

US beef exports to Korea are expected to resume in the near future after the Korean officials delayed the expected opening last week. More recently there have been additional fireworks as to whether beef from older cattle will be allowed for shipment to the Korean market. In the past most US beef exported to Korea was from fed cattle, thus animals younger than 30 months old. And while the recent agreement would allow beef from older animals to be shipped to Korea, volumes would likely be quite small given the wide availability of such product from Australia and New Zealand Despite recent delays, however, the US futures market clearly believes that the Korean market will soon open to US beef products thus boosting overall US beef prices. Until the issue has been settled, it is unlikely that US beef packers will put much product on boats. There is a considerable amount of beef currently in cold storage in Korea, blocked from entry after the decision to stop US beef shipments last year. That beef is expected to be cleared and enter commerce once the ban is lifted. Live cattle futures were up as much as 132 points on the October contract and overall all live and feeder cattle contracts were higher.

The decision of the Korean president to finally resolve the beef trade dispute with the US has come at a significant political cost. Others may be a lot closer than us to this issue but it appears to us that the Korean government is intent on trying to resolve the FTA impasse sooner rather than later. Maybe there are concerns that after the current elections the mood of the US congress regarding such trade agreements may change. It also may reflect a philosophical difference between the current and past political leadership in Korea. For now, however, there is little question that the beef issue has crystallized a deep resentment within the Korean society. News reports indicate that the approval rating of the new Korean president is at 25 percent, unheard of given the general good feelings that usually follow an election. According to Korea Times, some 1.2 million people signed an online petition asking for the impeachment of the president. While this was a symbolic act, it shows the depth of popular feelings on this issue. Last year, Korean consumers voted with their feet and wallets that US beef was safe to eat. This time around, however, the issue has been further complicated by the intricacies of domestic politics and national pride. We get the feeling that we have yet to see the end of such delays.

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