UPDATE 2-Japan agrees to relax U.S. beef import restrictions

Mon Jan 28, 2013 12:24pm EST

* Govt panel of medical, food experts approves step

* Move to allow imports from cattle older than 20 months

* U.S. beef exports to Japan dropped 60 pct over past decade

* CME live cattle futures traders welcome Japan's steps

* Exports could encounter economic headwinds in near term

By Risa Maeda and Theopolis Waters

TOKYO/CHICAGO, Jan 28 (Reuters) - Japan on Monday agreed to allow U.S. beef imports from cattle up to 30 months old from February, relaxing a restriction in place for about a decade on what was once the biggest market for U.S. exports.

Under rules imposed in 2005, U.S. beef imports had been allowed only from cattle up to 20 months old after a total ban in 2003 following an outbreak of bovine spongiform encephalopathy. The restrictions helped Australia boost its share of Japan's 500,000-tonnes-a-year imported beef market.

Raising the age restriction, which had been mulled since 2011 as concern over mad cow disease ebbed, will allow U.S. exporters such as Cargill Inc and JBS USA Holdings Inc to regain lost market share in the world's No.2 beef importer.

U.S. meat exporters say the step brings Japan into line with other countries.

But the Consumers Union of Japan said on Monday that it opposed the move due to concerns over lax checks on animal feed and product shipments in the United States, adding that Japan's government had underestimated the risks.

A government panel of medical and food experts agreed to relax the restriction after Health Minister Norihisa Tamura left the decision to the panel. Tamura has said it would become effective on Feb. 1 upon the panel's approval.

A health ministry official said Japan and the United States had agreed to keep talking about further loosening regulations longer-term.

The country's imports of U.S. beef plunged by 60 percent to some 120,000 tonnes from 2001 to 2011, with Australian suppliers the main beneficiaries in an import market worth over $2 billion.

Investors in Chicago Mercantile Exchange live cattle futures embraced Japan's move.

At 10:10 a.m. CST (1610 GMT), CME spot February live cattle were up 1.675 cents, or 1.43 percent, at 127.975 cents per lb.

Steps by Japan to bring in more beef were "friendly" for the futures market and the industry as a whole, but many traders and industry analysts had anticipated such a move for some time, said Joe Ocrant, president of Oak Investment Group.

While some have speculated that changes by Japan could be worth hundreds of millions of dollars in exports of U.S. beef to the Asian country in the coming years, others are cautiously optimistic about the near-term impact.

The expected rise in U.S. beef shipments could encounter headwinds with Japan in the midst of a significant recession, said Jim Robb, director of the Colorado-based Livestock Marketing Information Center.

Also, the yen has been declining relative to the U.S. dollar, making imports more expensive, he said.

"Furthermore, wholesale beef prices will be record-high in 2013 because the U.S. cattle supply is still shrinking, and those higher prices tend to reduce sales. Still, it could be a net positive in terms of U.S. beef exports to Japan in the months ahead," Robb said.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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