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Market Reports


March 11, 2019

 

USMEF: US breaks record for beef exports in 2018

 


In 2018, US beef exports broke the previous value record and achieved a new high for volume, according to year-end 2018 statistics released by USDA and compiled by the US Meat Export Federation (USMEF).


Pork export volume came up just short of the record set in 2017 while value slipped 1% year-over-year.


Fueled by tremendous demand in South Korea, Japan, Taiwan and the ASEAN region, US beef exports reached 1.35 million tonnes, up 7% from 2017 and exceeding the 2011 record by 5%. Export value soared to US$8.33 billion, breaking the 2017 record by US$1.06 billion – an increase of 15%. For December only, beef export volume was down slightly from a year ago to 112,777 tonnes, but value still increased 4% to US$700.2 million.


Beef export value also broke record on a per-head basis, averaging US$323.14 per head of fed slaughter in 2018. This was a 13% increase over 2017 and exceeded the 2014 record by 8%. Beef exports accounted for 13.5% of total beef production in 2018 and 11.1% for muscle cuts, up from 12.9% and 10.4%, respectively, in 2017.


Despite significant headwinds, 2018 pork exports reached 2.44 million tonnes – just 0.5% below the 2017 record. Pork export value was US$6.39 billion, down 1% year-over-year and the third-highest total on record, trailing only 2014 (US$6.65 billion) and 2017 (US$6.49 billion). For December only, pork exports were down 5% from a year ago to 209,780 tonnes, valued at US$527.4 million (down 11%).


Pork export value averaged US$51.37 per head slaughtered in 2018, down 4% year-over-year. Exports accounted for 25.7% of total pork production, down about one percentage point from 2017. The ratio was 22.5% when including only pork muscle cuts – up from 22.3% in 2017.


South Korea accounts for half of the US$1 billion surge in beef exports


While demand for US beef showed remarkable strength throughout the world in 2018, no market exemplified this momentum more than South Korea. Exports to the country increased 30% year-over-year in volume to 239,676 tonnes and jumped 43% in value to US$1.75 billion – an increase of US$526 million over the 2017 record and more than double the value total posted just three years ago. Chilled beef exports to South Korea increased 19% to 53,823 tonnes and climbed 29% in value to a record US$525 million, illustrating US beef's surging success in the Korean retail and foodservice sectors. US beef accounted for 58% of Korea's chilled beef imports in 2018.


"There may have been no greater ag trade success story in 2018 than US beef exports to Korea," said Dan Halstrom, USMEF president and CEO. "Less than a decade removed from street protests opposing the reopening of this market, Koreans now consume more US beef per capita than any international destination. This is a testament to the US beef industry's strong commitment to the Korean market and the outstanding support received from the US government – through both USDA promotional funding and the negotiation of the Korea-US Free Trade Agreement (KORUS), which has dramatically lowered import duties on US beef."


Since KORUS was implemented in 2012, the import duty rate on US beef has declined from 40-18.7% and will fall to zero by 2026. US beef's main competitors also have free trade agreements with Korea but currently face higher duty rates than the US, including Australia (24%), Canada (26.6%) and New Zealand (26.6%).


Other 2018 highlights for US beef exports include:


- Exports to leading market Japan increased 7% from a year ago in volume (330,217 tonnes) and 10% in value (US$2.08 billion, topping US$2 billion for the first time in the post-BSE era). The US is Japan's largest beef supplier by value and a close second to Australia in volume, but this position is tenuous due to a widening tariff rate gap between US beef and its main competitors, all of which secured tariff rate relief under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).


- Taiwan's demand for US beef continued to surge in 2018, with exports increasing 33% in volume (59,694 tonnes) and 34% in value (US$550 million) from the previous records set in 2017. Export value to Taiwan has doubled over the past five years, setting six consecutive records, and US beef holds more than 75% of Taiwan's chilled beef market – the largest share of any Asian destination.


- While total beef exports to Mexico increased only slightly year-over-year in volume to 239,110 tonnes, beef muscle cuts achieved strong growth – climbing 7% to 142,514 tonnes. Total export value was up 8% to US$1.06 billion, exceeding US$1 billion for the first time since 2015. Muscle cut value increased 11% to US$828.8 million.


- Beef exports to China/Hong Kong softened in November and December and finished the year 3% lower in volume at 130,129 tonnes. However, export value still climbed 12% to US$1.03 billion (marking the first time since 2014 that US beef exports topped US$1 billion in four separate markets). This included exports to China of 7,297 tonnes valued at US$60.8 million. China reopened to US beef in June 2017 after a 13-year absence, but US beef has been heavily disadvantaged by the 25% retaliatory duty imposed by China last year, bringing the total tariff rate on US beef to 37%. By comparison, Australian beef pays just 6% and New Zealand beef is duty-free, benefiting from free trade agreements with China.


- Led by outstanding growth in the Philippines and Vietnam and larger shipments to Indonesia, beef exports to the ASEAN region increased 20% from a year ago in volume (49,226 tonnes) and 30% in value (US$274.6 million).


- Strong growth in Colombia kept beef exports to South America steady with the previous year's volume at 28,333 tonnes, while value set a new record at US$126.2 million (up 10%). Exports were also higher year-over-year to Peru but declined to Chile as Brazil and Argentina's exports to Chile surged, benefiting from weaker currencies.


A strong performance in mainstay market Guatemala and significant growth in Costa Rica and Panama pushed beef exports to Central America to record highs in volume (14,739 tonnes, up 14%) and value (US$80 million, up 11%).


Solid year for US pork, but second-half exports pressured by retaliatory duties


Through May 2018, pork exports to leading volume market Mexico appeared to be headed for a seventh consecutive record, topping the 2017 pace by 6%. But May was the last month in which exports to Mexico would increase year-over-year, due to retaliatory duties imposed in response to US tariffs on steel and aluminum imports. Export volume to Mexico held up relatively well, finishing the year at 777,143 tonnes – 3% below the 2017 record. However, export value took a bigger hit, declining 13% to US$1.31 billion – the lowest since 2015. The decline in value from June through December was 24%, totaling US$218 million, underscoring the large degree to which US producers and exporters bore the cost of Mexico's 20% retaliatory duty.


"The US pork industry understands the vital importance of the Mexican market, and with strong industry support USMEF has intensified its efforts to retain as much of this business as possible," Halstrom said. "This includes enhanced outreach in every sector, from large processors, to regional supermarkets, to specialty retailers and restaurant chains. While these efforts have been successful, the decline in export value clearly shows the negative impact these retaliatory duties have imposed on the US pork supply chain."


Retaliatory duties also impacted pork exports to China/Hong Kong, which fell 29% in volume (351,774 tonnes) and 21% in value (US$851.7 million) compared to 2017. This included a 30% decline in pork variety meat volume to 225,414 (China/Hong Kong is the largest destination for US pork variety meat). The corresponding dramatic decreases in values for feet and picnic hocks, combined with lower ham and picnic values, mean that retaliatory tariffs in China and Mexico resulted in lost value of US$11.75 per head (or US$860 million) from June through December 2018.


On the positive side, US pork exports to South Korea broke record in 2018, soaring 40% year-over-year in volume (242,372 tonnes) and 41% in value (US$670.3 million). Export value topped the previous record, set in 2011, by 35% as US pork capitalised on South Koreans' surging pork consumption. Most US pork now enters South Korea duty-free under KORUS, making pork products more affordable and accessible and a perfect fit for thwe country's convenience-driven demand. South Korea's import of US pork variety meat jumped by 62% in volume (15,525 tonnes) and 68% in value (US$45.9 million) as items such as bungs and feet made impressive gains.


Other 2018 highlights for US pork include:


Exports to leading value market Japan were steady with 2017 in both volume (394,300 tonnes) and value (US$1.62 billion). But similar to beef, US pork's position as Japan's leading pork supplier is threatened by implementation of CPTPP and the Japan-EU Economic Partnership Agreement. The US is now the only major pork supplier that has not gained tariff relief in Japan, with the most immediate impact expected in Japan's imports of ground seasoned pork and processed pork products.


Fueled by remarkable growth in Colombia and solid increases in Chile and Peru, pork exports to South America reached new heights in 2018, increasing 30% in volume (135,298 tonnes) and 23% in value (US$328.8 million). While most US pork entering South America is for further processing, the US industry is increasingly making inroads into the region's rapidly growing retail and foodservice sectors.


Pork exports to Central America were also record-large, increasing 16% in volume to 86,031 tonnes and 12% in value to US$201.7 million. Exports increased to mainstay markets Honduras and Guatemala, but much of the region's growth was achieved in Panama, El Salvador, Costa Rica and Nicaragua.


Australia is one of the top destinations for US hams (outside of Mexico and China/Hong Kong), and strong demand for hams pushed pork exports to Australia up 13% from a year ago in volume (80,431 tonnes) and 9% in value (US$227.3 million). The US also gained significant market share, climbing from 40-46% of Australia's pork imports. Exports to New Zealand also trended higher, climbing 10% in volume (7,897 tonnes) and 12% in value (US$25.6 million).


Impressive growth in the Philippines and Vietnam pushed pork exports to the ASEAN region 43% higher in volume (68,326 tonnes) and 31% higher in value (US$168.5 million). In a down year for US pork variety meat, exports to the ASEAN were a notable bright spot – more than doubling from a year ago in both volume (28,619 tonnes, up 129%) and value (US$45.6 million, up 107%).


Pork exports to the Dominican Republic continued to gain momentum in 2018, easily surpassing previous records for both volume (42,669 tonnes, up 39%) and value (US$92.5 million, up 30%).


- USMEF

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