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Market Reports


July 9, 2019

 

US pork, beef exports rebound in May; volume and value reach 2019 highs

 

 

May exports of US pork and beef were steady with last year's strong volumes and increased year-over-year in value, according to data released by USDA and compiled by the US Meat Export Federation (USMEF).


Pork exports totaled 217,999 tonnes in May, steady with last year's pace, while value increased 1% to US$567.8 million – the highest monthly value total since April 2018. For January through May, pork exports were still 4% below last year in volume (1.035 million tonnes) and down 10% in value to US$2.57 billion.

 

Pork export value averaged US$54.83 per head slaughtered in May, the highest monthly average since May 2018 (US$55.05). For January through May, export value averaged US$48.74 per head, down 12% from the same period last year. May exports accounted for 27.3% of total US pork production and 23.2% for muscle cuts only, down from 27.8% and 24%, respectively, a year ago. For January through May, exports accounted for 25.4% of total pork production (down from 27.5%) and 22.1% for muscle cuts (down from 23.7%).

 

May beef exports were also steady year-over-year in volume (117,541 mt) while export value increased 1% to US$727.6 million – the second-highest on record, trailing only the August 2018 total of US$751.7 million. For January through May, exports were 3% below last year's record pace in volume (530,088 tonnes) but only slightly lower in value at US$3.3 billion.

 

Beef export value per head of fed slaughter averaged US$312.85 in May, down slightly from a year ago. For January through May, beef export value averaged US$309.33 per head, down 3%. May exports accounted for 14.6% of total US beef production and 12% for muscle cuts only, each down slightly from a year ago. For January through May, exports accounted for 14% of total production and 11.3% for muscle cuts – down from 14.6% and 11.9%, respectively, a year ago.

 

Rebound in Japan and China/Hong Kong offsets slower pork exports to Mexico

 

After trending lower through the first four months of 2019, May pork exports to leading value market Japan increased 5% from a year ago in volume (36,373 tonnes) and 3% in value (US$148.6 million, the highest in 18 months.) Stronger May volumes included growth in chilled pork, up 2.5% to 19,795 tonnes. For January through May, exports to Japan were still 5% behind last year's pace in volume (159,539 tonnes) and down 7% in value (US$642 million). However, chilled exports held close to last year at 87,362 tonnes, down less than 1% (valued at US$414.9 million, down 2%). Japan's import data shows the biggest decrease from the US is in ground seasoned pork (GSP), where the US faces the full 20% duty and competitors pay 13.3%. Japan's imports of US pork fell by US$76 million through May, including a US$46 million decrease in GSP.

 

Despite the continued 50% retaliatory duty on US pork going to China, May also brought an uptick in pork exports to China/Hong Kong, which increased 33% from a year ago in volume to 45,442 tonnes, while value increased 5% to US$84 million. Through the first five months of 2019, exports to the region still trailed last year by 7% in volume (173,642 tonnes) and 25% in value (US$326 million).

 

On May 20, the 20% retaliatory duty on most US pork entering Mexico was removed as the US, Mexico and Canada reached an agreement on steel and aluminum tariffs. While the return to duty-free status is expected to fuel a rebound in pork exports to Mexico, it came too late to have much impact on May results as exports fell 26% from a year ago in volume to 52,555 tonnes and 15% in value to US$98.4 million. For January through May, exports to Mexico were down 19% in volume (284,946 tonnes) and 27% in value (US$454.9 million).

 

"May export results for US pork were very encouraging, especially the renewed momentum in Japan and China/Hong Kong," said USMEF president and CEO Dan Halstrom. "When exports to Mexico get back on track and trade talks with Japan and China show progress, this will be a very welcome lift for the US pork industry."

 

All of US pork and beef's major competitors gained tariff relief in Japan this year through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the economic partnership agreement between Japan and the European Union, making red meat trade a major focus of the ongoing US-Japan trade agreement negotiations. Access for US agricultural products was also a priority in the high-level US-China trade talks that broke off in early May but which are expected to resume following President Trump's June 29 meeting with Chinese President Xi Jinping.

 

Other January-May highlights for US pork include:

 

South America is the leading tonnage growth market for US pork in 2019 as continued growth in Colombia and Chile pushed exports 40% above last year's record pace in volume (71,240 tonnes) and 37% higher in value (US$171.8 million). Exports to Peru cooled in May but remain significantly higher year-over-year.


Exports to Oceania continue to climb, increasing 45% in volume (52,502 tonnes) and 30% in value (US$138.7 million) from a year ago. Australia is one of US pork's top-performing markets in 2019, with volume up 45% from last year's record pace to 48,110 tonnes and value increasing 29% to US$125.4 million. US share of Australia's imports climbed to 52%, compared to 45% last year. Exports to New Zealand were also significantly higher in both volume (4,392 tonnes, up 43%) and value (US$13.3 million, up 33%).

 

Also coming off a record year in 2018, exports to Central America climbed 11% in both volume (37,416 tonnes) and value (US$88.2 million). While exports to leading market Honduras were up slightly from a year ago, double-digit growth was achieved in Guatemala, Panama, Costa Rica and Nicaragua.

 

While pork exports to Taiwan slowed in May, January-May volume still increased 60% from a year ago to 9,972 mt while value was up 44% to $22 million.

 
Korea, Taiwan lead strong month for beef exports

 

Beef exports to South Korea remained on a record pace in May, climbing 11% to 23,004 tonnes and 13% in value to US$165 million. January-May exports to Korea were 11% above last year in volume (101,761 tonnes) and 15% higher in value (US$743.5 million). With continued growth at retail and foodservice, US share of Korea's chilled beef imports reached a post-BSE high of 61%, up from 57% last year and 52% in 2017. Chilled beef from the US totaled 22,268 tonnes, up 8% year-over-year, valued at US$224 million, up 12%.

 

Following a fairly steady first quarter, beef exports to Taiwan strengthened for the second straight month in May at 5,873 tonnes (up 27% from a year ago), valued at US$52.6 million (up 28%). Through May, exports to Taiwan were 11% above last year's record pace in volume (24,478 tonnes) and 4% higher in value (US$218.2 million).

 

Though slightly below last year's level, May export volume to leading market Japan rebounded to 29,749 tonnes, while value was down 3% to US$190.8 million. Export volume through May was steady with last year's pace at 128,045 tonnes while value increased 1% to US$828 million. This performance was driven in part by a large increase in beef variety meat exports (mainly tongues and skirts), which jumped 23% in volume (24,135 tonnes) and 20% in value (US$157.5 million). Despite the tariff disadvantages, US beef's share of Japan's imports has held nearly steady this year at 41%, but with a level playing field, there are tremendous opportunities for growth. For example, Japan's imports of Canadian and Mexican beef increased by 76% and 39%, respectively, through May.

 

"The explosive growth US beef has achieved in Korea and Taiwan is a testament to the quality of the product and the outstanding customer base the US industry has established over the years," Halstrom said. "That same dynamic is present in Japan, on an even larger scale. But for Japan to remain the 'strong growth' column, it is essential that we have market access comparable to our key competitors."

 

Other January-May highlights for US beef include:

 

- Mexico is a very solid market for US beef in 2019. Although exports through May were 2% below last year's pace at 97,102 tonnes, value increased 8% to US$462.1 million. This was due to strong growth in muscle cut exports, which were up 7% from a year ago in volume (59,357 tonnes) and 10% in value (US$361.5 million).

 

- Exports to the Dominican Republic remain on a tremendous roll, soaring 50% above last year's record pace in volume (3,741 tonnes) and gaining 39% in value to US$30.3 million. US beef continues to capitalise on market access improvements secured in the Dominican Republic-Central-America-US Free Trade Agreement (CAFTA-DR), with exports to Central America also increasing 5% from a year ago in volume (5,699 tonnes) and 10% in value (US$33.8 million). Growth leaders in the region include Costa Rica, Guatemala, Honduras and Nicaragua.

 

- January-May exports to Egypt, the largest destination for US beef livers, were down 7% year-over-year in volume at 28,912 tonnes, but increased 6% in value to US$34.8 million. Exports strengthened in May, increasing 26% in volume (6,224 tonnes) and 35% in value (US$7.1 million) year-over-year. This was significant, as changes in Egypt's halal certification process that took effect May 1 are a concern for the US industry. At least, so far, these changes do not appear to be slowing exports.

 

- Retaliatory tariffs in China and other market access challenges limited US beef exports to China/Hong Kong, with January-May volume down one-third to 38,405 tonnes and value declining by 27% to US$322 million.

 

- USMEF

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