April 24, 2019

USMEF: February exports below year-ago levels for US pork, beef


February exports of US pork and beef fell below last year's levels, according to statistics released by USDA and compiled by the US Meat Export Federation (USMEF).

Pork export volume was down 9% from a year ago in February to 186,745 tonnes, while export value dropped 17% to US$455.9 million - the lowest monthly value total since February 2016. For January through February, pork exports were 5% below last year's pace in volume (388,580 tonnes) and 13% lower in value (US$950 million).

Pork export value averaged US$45.12 per head slaughtered in February, up slightly from January but 21% lower year-over-year. The January-February average was US$44.93, down 16%. Exports accounted for 24% of total February pork production and 21% for muscle cuts only, down from 27.8% and 24%, respectively, a year ago. For January-February, the ratio of total production exported was 23.8% (down from 26.1% a year ago) and 20.6% for muscle cuts only (down from 22.7%).

February beef exports declined 6% year-over-year to 94,885 tonnes while value was down 3% to US$581.6 million. January-February exports were 3% below last year's record pace in volume (199,651 tonnes) but steady in value at US$1.22 billion. The volume decline is mainly due to lower exports to Hong Kong and Canada, as shipments to most other major beef markets have trended higher in 2019.

Beef export value per head of fed slaughter averaged US$309.39 in February, down 4% from a year ago, while the January-February average was down 3% to US$296.19. February exports accounted for 12.8% of total beef production and 10.1% for muscle cuts only, down from 13.6% and 10.8%, respectively, in February 2018. For January-February these ratios were 12.5% and 9.9%, each down one-half percentage point from the first two months of 2018.

"The stiff headwinds trade disputes have created for US pork exports have certainly not subsided," said USMEF president and CEO Dan Halstrom. "USMEF is encouraged by reports of progress toward resolution of these disputes, but in the meantime missed opportunities for export growth are mounting. On the beef side, there is still much to be excited about, especially with the launch of US-Japan trade agreement talks. A great deal is at stake for both US beef and US pork in those negotiations, as exports to Japan deliver remarkable returns for the entire U.S. supply chain and it is essential that we get back on a level playing field with our competitors."

Retaliatory duties continue to pressure US pork exports to Mexico, with volume through February down 13% from a year ago to 119,430 tonnes and export value dropping 32% to US$171.3 million. The US is still Mexico's primary pork supplier but Canada, Chile and the EU have all gained market share in 2019.

Demand for imported pork may now be on the upswing in China/Hong Kong due to African swine fever (ASF) as buyers prepare for a looming pork shortage, but China's retaliatory duties make it difficult for the US industry to capitalise. The duty rate on US pork is 62%, compared to 12% for other suppliers. Through February, exports to China/Hong Kong were down 22% from a year ago to 54,383 tonnes, with value dropping 34% to US$108.2 million.

In the leading value market for US pork, exports are feeling the pinch from Japan's lower duties on imports from the EU, Canada and Mexico. Through February, US pork exports to Japan were down 9% from a year ago in volume (61,464 tonnes) and 12% lower in value (US$248.7 million). Chilled pork exports to Japan were down 6% in both volume (34,685 tonnes) and value (US$166 million).

January-February highlights for US pork include:

- Exports to South America continued to shine behind strong performances in Colombia and Peru and a surge in exports to Chile. Export volume to the region increased 44% from a year ago to 25,772 tonnes while value jumped 49% to US$64.1 million.

- Strong growth in both Australia and New Zealand pushed exports to Oceania 31% ahead of last year's pace in volume (20,117 tonnes) and 18% higher in value (US$53.7 million).

- Despite lower exports to leading market Honduras, Central America continued to be a strong performer for US pork as growth in Costa Rica, Panama and Guatemala moved export volume to the region 16% higher year-over-year to 14,201 tonnes, while value climbed 12% to US$32.4 million. A safeguard measure in the US-Panama Trade Promotion Agreement triggered April 1, raising tariff rates on US pork through the end of this year, but USMEF still anticipates strong demand for US pork in Panama.

- Pork exports to the Dominican Republic remained on a record pace and variety meat exports to Trinidad and Tobago surged, pushing exports to the Caribbean significantly higher in both volume (9,331 tonnes, up 18%) and value (US$22.1 million, up 16%).

- Fueled by strong growth in the Philippines and Singapore, exports to the ASEAN region were up 29% year-over-year in volume (7,982 tonnes) and 21% higher in value (US$20.4 million).

- Taiwan has emerged as a strong growth market for US pork, with exports climbing 85% in volume to 4,200 tonnes and value up 50% to US$8.6 million. After slumping in 2016, pork exports to Taiwan have trended higher over the past two years.

- High inventories and lower domestic prices caused pork demand in South Korea to pull back from last year's record-breaking pace, but exports to Korea remained relatively strong in both volume (38,209 tonnes, down 6%) and value (US$102.1 million, down 14%). Korea's hog prices gained momentum in March and were at or above last year's levels from mid-March to mid-April, suggesting South Korea's pork demand remains strong and the industry is preparing for ASF's potential impact on global pork supplies.

Beef exports to leading market Japan remained strong in February, pushing January-February exports 8% above last year's pace in volume (47,695 tonnes) and 10% higher in value (US$309.3 million).

Frozen beef exports to Japan, primarily short plate and cuts in the clod/round category, rebounded from last year when frozen US beef was still subject to Japan's 50% snapback duty rate. Variety meat exports (mainly tongues and skirts) have also performed especially well in 2019, soaring 35% in volume (8,707 tonnes) and 29% in value (US$58.9 million). But the competitive landscape continues to intensify in Japan, as major competitors enjoyed another decrease in import duties on April 1. The duty rate for beef cuts from Australia, Canada, New Zealand and Mexico dropped from 27.5% to 26.6%, while the US rate remains at 38.5%. The duty rate for beef tongues and skirt meat from these competitors is now 5.7%, while the US rate remains at 12.8%.

Following a record-shattering 2018, beef exports to South Korea continue to push higher, though at a more moderate pace. January-February exports to Korea increased 7% in volume to 35,529 tonnes while value was up 11% to US$261.7 million. US beef continues to make strides in the Korean supermarket and foodservice sectors, driven by red-hot demand for US steaks. Prepared US beef products are also increasingly popular in a wide range of home meal replacement items.

Other January-February highlights for US beef include:

- While beef exports to Mexico were steady with last year in volume (40,048 tonnes), value climbed 13% to US$197.9 million. Beef muscle cuts achieved strong growth in both volume (24,434 tonnes, up 15%) and value (US$155.5 million, up 19%).

- Exports to Taiwan were 3% ahead of last year's record volume pace at 8,342 tonnes, but value slipped 6% to US$73.7 million.

- Beef exports to Central America cooled in February but January-February exports to the region were still up 17% year-over-year in volume (2,357 tonnes) and increased 14% in value (US$13.2 million), with growth driven mainly by Costa Rica and Honduras. Beef exports to the Dominican Republic have surged in 2019, climbing 87% in volume (1,470 tonnes) and 78% in value (US$11.5 million).

- Africa has been a promising source of beef variety meat growth this year, with variety meat exports to South Africa (mainly livers) increasing 80% in volume (1,179 tonnes) and more than doubling in value (US$1.1 million, up 113%). Variety meat exports were also sharply higher to Gabon, increasing 311% in volume (739 tonnes) and 157% in value (US$529,000).

As noted above, a slow start to 2019 in Hong Kong and Canada partially offset solid growth in other markets. Exports to Hong Kong fell 40% to 13,712 tonnes, valued at US$110.4 million (down 35%). Exports to Canada were down 15% in volume (15,908 tonnes) and dropped 13% in value to just under US$100 million.


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