US-Mexico border reopening unlikely to impact Australian lean trim exports to US

The planned reopening of the US-Mexico border to live cattle imports is unlikely to materially impact Australian lean trimmings exports to the US, despite the potential for higher feeder cattle supplies in the US market, traders and exporters said.

The US Department of Agriculture announced a coordinated, phased reopening of the border to cattle imports beginning Aug. 24, contingent on Mexico's adherence to a joint action plan between the two countries to combat New World Screwworm.

The reopening will begin with the cattle trade at the Douglas, Arizona, port of entry, while initiating the operational steps necessary for subsequent openings of other ports, the USDA said.

According to the USDA, every animal will undergo a full USDA inspection to ensure it shows no signs of NWS.

"I think this news [the reopening of the border] won't impact the market that much," an Australia-based lean-trimmings trader said.

A local exporter expressed a similar view, saying the development was not currently affecting business decisions.

"We see no impact at this moment. It is not affecting us and the lean trimmings market in short term," the exporter said, adding that livestock prices in the US remained strong.

An official from the US Meat Export Federation also said it was too early to assess the broader industry impact, as the border reopening will not begin until next month.

"For sure, the increased supply of feeder cattle will help the US total cattle inventory number to some degree," the representative said. "However, the main factor limiting current US beef production is not cattle availability, but a lack of slaughter capacity and the slow pace of cattle being marketed."

US cattle slaughter capacity remains key constraint

Although additional Mexican feeder cattle could support US cattle numbers, the USMEF official said it would not immediately ease the supply-side constraints facing the US beef sector.

US cattle marketing in June declined 2.7% year over year to 1.66 million head and was 13% below the five-year average, according to the Cattle on Feed report released by USDA on July 24. Packers have sharply reduced slaughter volumes since mid-April as steep operating losses have persisted, the USMEF official said.

At the same time, record-high live cattle prices have made it more difficult to accelerate marketing, the official said. Feedlot operators have also had an incentive to keep cattle on feed longer, as the economics of additional weight gain remain favorable, the official said. With feeders continuing to receive premiums for heavier cattle, there has been little motivation to rush cattle to market, further slowing the pace of beef production.

Reopening may support South Korean importers

While the impact on Australian lean trimmings exports to the US is expected to be limited, the reopening could be beneficial for South Korean beef importers, who are facing tight supply conditions and higher import costs.

"It's good news heard in a million years", one South Korea-based importer said.

South Korea filled its 2026 quota for Australian beef imports on July 21 and is now subject to a 24% out-of-quota tariff on additional Australian beef. As a result, any sign of an improved US beef supply could be welcomed by Korean buyers seeking alternative sources.

South Korea imported 15,100 mt of beef from the US in June, down 19.9% year over year and 27.3% below the five-year average, according to protein analysts at S&P Global Energy CERA in their recent South Korea Beef and Cattle Short-Term Outlook report.

Another South Korea-based importer said the reopening could be good for the US in the long term and expects US beef prices to soften in a few months.

In contrast, Japanese market participants said the reopening of the border was unlikely to significantly affect US beef exports to Japan.

"I think there will be little impact for Japan because we will be reducing imports," one Japanese importer said.

Platts, part of S&P Global Energy, assessed FCA Australia 90CL lean trimmings at $6,997/mt on July 29, down $1.4% day over day.