September 9, 2019

USMEF: July pork exports reach new heights; beef exports also strong


US pork exports were record-large in July while beef exports were relatively steady with last year's strong results, according to data released by USDA and compiled by the US Meat Export Federation (USMEF).

July pork exports surged to 233,242 tonnes, up 32% year-over-year and topping the previous record from April 2018. Export value was US$623.3 million, up 34% and breaking the previous high reached in November 2017. These results pushed January-July exports 2% ahead of last year's pace at 1.48 million tonnes while value was down 2% at US$3.77 billion.

Pork export value averaged US$58.92 per head slaughtered in July, up 22% from a year ago and the highest in five years. January-July export value averaged US$51.33 per head, down 5% from the same period last year. July exports accounted for 29.3% of total US pork production (up from 24.7% a year ago and the highest since April 2018) and 25.9% for muscle cuts only (up from 21.7% and the highest ratio in five years). For January through July, exports accounted for 26.3% of total pork production and 22.9% for muscle cuts (down from 27% and 23.3%, respectively, a year ago).

Beef exports increased 1% year-over-year in July to 117,842 tonnes. Export value (US$720.4 million) was down slightly from a year ago but still the seventh-highest monthly total on record. January-July beef exports were down 2% from a year ago in volume (766,607 tonnes) while export value (US$4.75 billion) was slightly below last year's record pace.

Beef export value per head of fed slaughter averaged US$308.47 in July, down 7% from a year ago, while January-July export value averaged US$311.51 per head, down 2%. July exports accounted for 14.4% of total US beef production and 11.8% for muscle cuts only, down from 15.1% and 12.9%, respectively, last year. For the first seven months of the year, exports accounted for 14.1% of total beef production and 11.6% for muscle cuts - each down one-half percentage point from a year ago.

Momentum builds for US pork in Mexico and China; Japan results steady

Since Mexico lifted its 20% retaliatory duty on US pork in late May, exports have rebounded significantly. In July, exports to Mexico reached 67,161 tonnes, up 19% from a year ago, while value surged 38% to US$126.7 million. January-July results still trail last year by 12% in volume (411,944 tonnes) and 14% in value (US$700.7 million), but exports to Mexico are well-positioned for a strong second half of 2019.

"USMEF anticipated a rebound in Mexico once duty-free status was restored for US pork," said USMEF president and CEO Dan Halstrom. "But I want to emphasise that we did not take this recovery for granted. While those retaliatory duties were in place, USMEF ramped up our outreach with processors and other major buyers in Mexico and worked closely with them to keep product moving south, and with the duties removed, we're seeing the results of these efforts. Now ratification of the US-Mexico-Canada Agreement is critical to ensure long-term duty-free access to this key market."

Although held back by China's retaliatory duties on US pork, exports to China/Hong Kong contributed significantly to the July volume and value records. Exports to the region were a record 68,657 tonnes in July, more than tripling from a year ago, while value climbed 173% to a record US$152.5 million. For January through July, exports to China/Hong Kong were up 23% in volume (292,666 tonnes) and 3% in value (US$580.3 million). China's hog prices soared to record levels in August, and retail pork and poultry prices are also trending sharply higher as China's African swine fever-related hog shortage intensifies.

In leading value market Japan, where no new duties have been imposed but US pork faces higher tariff rates than its competitors, July exports were steady with last year at 31,019 tonnes, while value was up 5% to US$133.2 million. Through July, exports to Japan were down 3% in volume (222,300 tonnes) and 4% in value (US$906.7 million). The White House recently announced an agreement in principle with Japan that is expected to bring tariffs on US pork and beef in line with competitors' rates, but the agreement still must be finalised and the timeline for implementation is not yet known.

Other January-July highlights for US pork include:

- Led by strong results in mainstay market Colombia and exceptional growth in Chile and Peru, exports to South America climbed 30% above last year's record pace in volume (95,152 tonnes) and 32% higher in value (US$237.3 million).

- Australia and New Zealand continue to shine as important destinations for hams and other pork muscle cuts used for further processing. Exports to Oceania are on a record pace as volume increased 41% from a year ago to 69,978 tonnes, while value was up 32% to US$192.5 million.

- Despite facing higher tariffs since April due to a safeguard threshold, pork exports to Panama increased 41% from a year ago to 8,245 tonnes, while value was up 33% to US$20.5 million. This helped push exports to Central America 15% above last year's record pace in volume (52,820 tonnes) and 17% higher in value (US$127.5 million). In addition to Panama, exports trended higher year-over-year to Costa Rica, Guatemala, Nicaragua, and Honduras.

- Exports to Canada remained above year-ago levels in July, even after Canadian pork lost access to its top export destination – China – in late June. Through July, exports to Canada were up 11% from a year ago to 124,017, while value increased 8% to US$454.1 million.

Another record month for US beef in Korea

South Korea continues to be the growth pacesetter for US beef exports, as July volume reached 25,104 tonnes (up 6% from a year ago). This included 24,192 tonnes of beef muscle cuts, also up 6% and setting a new monthly volume record. Export value was US$181.3 million, up 7% from a year ago and breaking the record set the previous month. For January through July, beef exports to Korea climbed 11% in volume (151,983 tonnes) while export value (US$1.1 billion) exceeded last year's record pace by 14%.

"The Korean market is a remarkable success story and a blueprint for what US beef can achieve when consumers are not shouldering such a heavy tariff burden," Halstrom said. "With the duty rate now less than half of its pre-FTA level, US beef is enjoyed by more Korean consumers than ever, and in a wider variety of venues. This will also happen in Japan when duty rates come down, but on an even larger scale."

Although South Korea is gaining, Japan remains the largest volume and value destination for US beef. July exports slipped 2% from a year ago to 31,213 tonnes, with value down 4% to US$188.4 million. Through the first seven months of the year, exports to Japan were 1% below last years' pace in both volume (189,052 tonnes) and value (US$1.2 billion). Strong variety meat exports (especially tongues and skirts) have helped offset a slowdown in US chilled beef exports to Japan. Through July, variety meat volume was up 30% from a year ago to 38,249 tonnes, valued at US$228.8 million (up 21%). Although US beef pays higher tariffs than competitors for variety meat, the rate for US tongues and skirts is 12.8% compared to a 38.5% tariff on US muscle cuts. Competitors pay 5.7% and 26.6%, respectively.

Other January-July highlights for US beef include:

- Mexico is the third-largest market for US beef exports and the largest destination for US beef variety meat. Though export volume was modestly lower through July (135,337 tonnes, down 2%), value increased 6% to US$635 million. This included 52,389 tonnes of beef variety meat, down 8% from a year ago. But US variety meat items are commanding better prices, as export value increased 6% to US$138.2 million. Tripe export value, for example, increased 25% to US$57.3 million despite a 3% decline in volume (21,696 tonnes).

- Exports to Taiwan were 13% percent above last year's record pace in volume (36,601 tonnes) and 9% higher in value (US$324.6 million). The United States dominates Taiwan's chilled beef imports with 72% market share.

- Indonesia is 2019's leading destination for US beef in the ASEAN region, with exports climbing 55% to 12,071 tonnes and value up 23% to US$43.9 million. With solid growth in the Philippines and steady volumes to Vietnam, exports to the region increased 24% to 31,725 tonnes, valued at US$154.8 million (up 9%).

- Exports to the Dominican Republic are on a record pace, increasing 49% from a year ago to 5,305 tonnes, while value was up 37% to US$42.7 million.

- Despite a 37% tariff (which increased to 47% on September 1), July beef exports to China were the largest (903 tonnes) since the market reopened in 2017. Through July, exports were up 15% from a year ago in volume (4,749 tonnes) and 4% in value (US$37.8 million), though the US still accounts for less than 1% of China's booming beef imports.


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