US BEEF markets have been left reeling by Mexico's decision to stop buying from 30 US meat plants.
Officially, sanitation issues are cited as the reason for the suspensions, which were announced on the US Department of Agriculture's website on Friday.
But trade analysts and US cattle producers believe Mexico is retaliating against the US implementing new country-of-origin labelling regulations, or COOL, on beef imports.
Chicago beef futures prices, which were at a low for the year, fell by up to 2.5 per cent on Friday on hearing the news.
Mexico and Canada lodged a joint complaint with the World Trade Organisation on December 18 opposing the new laws.
Their main contention is that Mexican and Canadian producers supplying feeder cattle to US processors must meet stricter conditions than counterpart US farmers.
Mexico, while being a major supplier of feeder cattle to the US, is heavily dependent upon meat supplies from the US.
US Commodities analyst Don Roose said it appeared Mexico was using the suspension to send a signal to the US government that it didn't like COOL.
Mr Roose predicted any suspension in trade would be short-lived due to Mexico's reliance on meat imports.
Cattle supplied by Mexico and Canada for processing in the US would be designated as such.
It was a point which they believed would lead to processors and consumers discriminating against non-US livestock.
The Mexican decision to suspend US imports triggered a strong and bitter reaction on website blogs from people either opposed or supportive of the Mexican decision and US labelling laws.
Free-trade supporters argue that COOL is being used as a protectionist measure. These people were also angry with the influence of the rebel cattle group R-CALF in pushing for COOL.
As for the impact of COOL on imports of Australian manufacturing beef, because this beef was ground up with beef from US and other origins, it would be labelled as "multiple countries of origin".
With REUTERS
