AS predicted in this column two weeks ago, Japan has signed a limited trade deal with the United States on gaining what Prime Minister Shinzo Abe has described as "clear confirmation" from President Donald Trump that his administration will not use the Trade Expansion Act to limit or impose further tariffs on imports of Japanese autos.
The announcement was made last Wednesday, September 25.
Under a trade law provision which allows the US president to make executive agreements to mutually reduce tariffs with a foreign trading partner, this deal will likely not require congressional approval.
That means the only barrier remaining before implementation is ratification by the Japanese parliament (Diet) in its autumn session which starts next month.
Assuming Abe's "clear confirmation" satisfies the Diet, Japanese tariffs on US beef will reduce immediately from 38.5 per cent to 26.6pc, the same rate currently being paid by CP-TPP beef exporting nations Australia, Canada and New Zealand.
Understandably, the US beef sector is rejoicing.
US Meat Export Federation (USMEF) said that with tariff relief that parallels CP-TPP, it now expects beef exports to return to a strong growth trend in Japan.
Its forecast for 2020 (assuming reduced tariff rates are in place for the full year) is for beef volume to reach 360,000 tonnes worth US$2.3 billion.
By 2025, USMEF expects the US will have increased its share of the Japanese market to the point that its beef exports are worth US$2.8b.
But of particular concern to Australia is the fact that the US for some time has been enjoying growth in the Japanese market despite the higher tariffs it has faced.
Instead of being passed back through the chain to processors and producers, the extra cost of the tariff appears to have been passed forward to consumers who in turn seem happy to pay it as a money-for-quality proposition.
National Cattlemen's Beef Association (NCBA) president Jennifer Houston honed in on this point.
She said, "For the past few years, US beef producers have benefited greatly from growing demand for US beef in Japan. While Japanese consumers enjoy high quality US beef, they unfortunately pay a higher price for US beef due to the massive 38.5pc tariff. Removing that tariff allows more Japanese consumers to enjoy more US beef at a more competitive price."
The challenge therefore ahead for Australia would seem to be one of convincing the Japanese consumer that Australian high-quality beef is every bit as good as US high-quality beef and a better value proposition because of its clean, green credentials.
But maintaining the resolve to put in the hard work to consolidate and build the Japanese market is no doubt being tested by relative newcomer, China.
Taking all types of product from high-quality to grinding beef, China is changing the established order of global beef trade.
For export businesses the money currently on offer from China obviously fits the short-term imperative of maximising returns but balanced against that is the question of outlook for next year and the years after.
China is rapidly expanding its trade sources for meat.
Early this month, Brazil's Ministry of Agriculture, Livestock and Food Supply (MAPA) announced China had approved 25 additional meat processing plants for export, 17 of them being beef.
A fortnight later, Argentina's Minister of Agriculture, Livestock and Fisheries, Luis Miguel Etchevehere, announced that China had approved an additional 15 processing plants there, eight of them for beef. He added that he expected more to be added very soon.
No one is predicting when China's demand-for-beef growth curve will flatten out but when it does it might be as well not to have all of one's eggs in that particular basket.
Meanwhile, Australia's exports to Japan are continuing to decline.
Figures to August show volume tracking downward at a rate of around 9pc which if maintained will result in a 2019 level in the 280s compared to the 316,000t recorded last year.
Channel Country bullocks starting to move
IT is always interesting at this time of year to observe the changing pattern of cattle flow and prices between the northern and southern parts of the country.
Usually the grand finals signal the start of the southern flow of grass finished cattle to market and as numbers build, the very agreeable prices of the winter months give way to the point of trailing the rates being paid in the north.
Over the last couple of weeks this column has observed the re-alignment of cow rates in physical markets to the point of little difference between north and south.
That went a step further this week with heavy cows at Wagga another 8c/kg LW down on a 1200 head offering.
Bullocks, on the other hand, dipped below northern rates around mid-September.
Adjustment to public grids for Naracoorte and Wagga at that time put indicator 4-tooth ox 15c/kg behind their southern Queensland counterparts.
The upshot is that Channel Country bullocks are now starting to show up in southern Queensland kills.
One major processor I spoke to early in the week welcomed the extra weight these cattle will bring with the grass component of the kill currently made up mostly of females and light steers.
Rates in southern Queensland remain unchanged this week with published and unpublished grids showing 4-tooth ox at 555-560c/kg and heavy cow at 455-460.
Numbers remain reasonably solid as the dry persists with southern Queensland works at least two weeks in front and more like three to four weeks in central and north Queensland.
Southern operators are still active in northern markets and likely to remain until the southern season properly gets under way.
That may still be some weeks away with reports of parts of Victoria still being properly wet.
Then it will likely be a case of northern operators returning the favour and looking to supplement their kills with southern cattle, particularly if storms start to disrupt the northern flow.
