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LIVESTOCK MARKETS: U.S. meat exports continue strong pace in February

Mexico pacesetter for February pork exports.

February results for U.S. pork and beef exports were well above year-ago levels, with pork exports posting the strongest February volume on record, according to statistics released by the U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation (USMEF).

Pork exports reached 197,025 metric tons in February, up 15% year over year, with value up 17% to $486.7 million. For the first two months of 2017, exports totaled 399,692 mt, up 18%, with value increasing 22% to $995.3 million.

February exports accounted for 27.6% of total pork production and 22.9% for muscle cuts only, up from 23.8% and 20%, respectively, last year. January-February ratios were also significantly higher at 26.8% and 22.2%, compared to 23.0% and 19.3% in the first two months of 2016. Export value per hog slaughtered averaged $51.94 in February, up 18% year over year, while the January-February average was up 20% to $51.05.

Beef exports totaled 90,417 mt in February, up 9% year over year, with value up 16% to $508.5 million. Through February, beef exports were up 13% in volume to 186,905 mt and up 17% in value to $1.02 billion.

February exports accounted for 12.6% of total beef production and 10.1% for muscle cuts only, which was steady with last year. January-February ratios were also fairly steady at 12.4% and 9.8%, respectively. Export value per head of fed slaughter averaged $276.96 in February, up 13% from a year ago, while the January-February average was up 10% to $266.34 per head.

“With trade deficits being a hot topic of conversation, especially with countries such as Mexico, China and Japan, it's important to highlight the sectors in which U.S. products are competitive throughout the world and exports are thriving,” USMEF president and chief executive officer Philip Seng said. “The red meat sector is certainly in that category, as exports have helped fuel growth in the U.S. industry, and in turn, larger U.S. production has opened further export opportunities and generated positive returns for the entire supply chain.”

Pork exports strong to Western Hemisphere, North Asian

USMEF reported that Mexico was once again the pacesetter for February pork exports, with volume up 22% to 64,990 mt and value increasing 28% to $116 million. This pushed the two-month totals for Mexico 27% higher to 137,396 mt, with the value up 39% to $244.7 million.

“Mexico's strong demand is reflected not only in increased buying from the U.S. but also in relatively high domestic hog prices, as per capita consumption of pork continues to grow,” USMEF said. Strong demand from Mexico helped move prices for U.S. heavy bone-in hams higher in 2017 — up an average of 4% year over year.

For Japan, the leading value market for U.S. pork, February exports increased 14% to 32,178 mt, with valued rising 18% to $130.4 million. For January-February, exports to Japan were up 10% in volume to 63,755 mt and rose 14% in value to $256.1 million. Chilled pork exports to Japan increased 7% through February to 34,682 mt.

According to USMEF, other highlights for U.S. pork included:

  • China/Hong Kong continued to take large volumes of U.S. pork variety meats in February, offsetting the slowdown in pork muscle cuts and putting the combined February total at 42,881 mt, up 5% year over year, with value at $83.2 million, up 12%. Two-month totals were up 10% in volume to 80,893 mt and rose 15% in value to $159.3 million. China's hog prices dropped below year-ago levels in February and have continued to drift lower, but China/Hong Kong's total January-February imports were still up 35% from last year's record pace at 532,600 mt.
  • Pork exports to South Korea, which were slow in the first half of 2016 before gaining momentum later in the year, totaled 14,649 mt in February, up 26%, with value at $38.2 million, up 29%. Through February, volume increased 29% to 30,722 mt, while value improved 39% to $83.3 million. Korea's hog prices have increased an average of 8% this year, even as production has been growing, which is indicative of strong demand, USMEF said.
  • Led by a year-over-year doubling of exports to Colombia and Chile and solid growth in Honduras, exports to Central and South America were up 45% in volume to 27,022 mt through February, while value increased 42% to $61.8 million.
  • January-February exports to the Dominican Republic were also well above last year's pace, rising 28% to 5,279 mt, with value up 34% to $11.8 million.

Chilled beef to Japan, Korea and Taiwan drives growth

USMEF reported that Japan continued to solidify its position as the leading volume and value market for U.S. beef, with February exports to Japan climbing 48% from a year ago in volume to 23,789 mt and 55% in value to $134.3 million. Through February, exports to Japan were up 41% in volume to 46,276 mt and rose 44% in value to $259.6 million. This included a 60% increase in chilled beef volume to 19,404 mt.

Japanese import data showed that U.S. beef overtook Australian beef in the first two months of the year, with U.S. market share climbing to 45.6% while Australia's dropped to 44%.

Strong momentum continued for U.S. beef in Korea, where February exports increased 11% to 13,093 mt and value rose 26% to $86 million. This pushed the two-month totals up 23% in volume to 28,287 mt and up 31% in value to $177.6 million. Chilled exports through February were up 95% to 5,384 mt.

In Taiwan, February exports jumped 33% from a year ago to 2,886 mt, while value increased 26% to $25.3 million. Through February, exports were up 28% in volume to 6,477 mt and up 25% in value to $55.1 million. U.S. beef holds 70% of the chilled beef market in Taiwan, the most of any Asian market. Through February, chilled exports to Taiwan increased 12% to 2,479 mt.

USMEF noted that other highlights for U.S. beef included:

  • Exports within North America are off to a solid start in 2017, with January-February exports to Mexico increasing 14% from a year ago in volume to 36,235 mt and rising 3% in value to $147.4 million. Exports to Canada are showing signs of a rebound, with volume up 11% to 19,446 mt and value up 18% to $123.5 million.
  • Beef exports to two key South American markets increased significantly in value through February, with exports to Chile up 22% year over year to $8.9 million and exports to Peru up 68% to $4.3 million. The increase in Chile was achieved despite a 16% decline in volume to 1,417 mt, while volume to Peru was up 16% to 1,130 mt.
  • A rebound in the Philippines and continued growth in Vietnam pushed January-February beef exports to the Association of Southeast Asian Nations region up 33% in volume to 4,774 mt and up 19% in value to $27.3 million. Exports to Indonesia, which set a value record of $39.4 million last year, are off to a slow start in 2017, with value through February down 48% to $3.5 million.

Strong growth in beef exports to most Asian markets helped offset a slowdown to Hong Kong, where January-February volume was down 21% to 16,131 mt and value was down 12% to $104.7 million.

Market recap

Losses continued in the April fed cattle futures market, but the markets appeared to find support as the week progressed. Nearby contracts closed lower Monday at $119.425/cwt. but finished higher Wednesday and again into Thursday’s close of $118.80/cwt.

April feeder cattle futures were mostly lower this week. Nearby contracts closed higher Thursday at $131.95/cwt. after closing lower Tuesday at $132.025/cwt. and Wednesday at $130.525/cwt.

For the beef cutouts this week, Choice and Select closed lower at $207.90/cwt. and $200.28/cwt., respectively.

April lean hog futures were mostly lower but climbed as the week progressed. Nearby contracts closed lower Tuesday at $63.625/cwt. but finished higher Thursday at $63.925/cwt.

Pork cutout values were mixed on Thursday. The wholesale pork cutout was lower at $74.18/cwt. Loins and hams closed higher at $73.86/cwt. and $55.95/cwt., respectively, while bellies closed lower at $122.07/cwt.

Hogs delivered to the western Corn Belt were lower this week, closing at $60.72/cwt. on Thursday.

The U.S. Department of Agriculture reported the Eastern Region whole broiler/fryer weighted average price at 95.83 cents/lb. on March 31.

According to USDA, egg prices were steady, with a steady to weak undertone. Offerings were mostly moderate, although moderate to heavy in California. Demand has been in a full range of light to good. Supplies have been moderate to heavy in the Midwest and California and moderate elsewhere.

Large eggs delivered to the Northeast were unchanged at 85-89 cents/doz. Prices in the Southeast and Midwest were also unchanged at 85-88 cents/doz. and 78-81 cents/doz., respectively. Large eggs delivered to California were unchanged at $1.36/doz.

For turkeys, USDA said the market was steady to barely steady. Offerings and demand have both been light to moderate. Prices for hens were lower on the upper range at 97 cents to $1.03/lb., while prices for toms were unchanged at 97 cents to $1.03/lb.

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