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Global appetite helps May beef exports shatter value record

Pork export volumes and values fall amid trade uncertainty.

U.S. beef exports set a new value record in May while also increasing significantly year over year in volume, according to data released by the U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation (USMEF). May pork exports were lower than a year ago, although January through May totals for U.S. pork remained ahead of last year’s pace, USMEF said.

Beef export volume was 117,871 metric tons in May, the sixth largest on record, valued at a remarkable $722.1 million, which surpassed the previous monthly high (March 2018) by a healthy 4% and was 24% higher than a year ago. Through the first five months of 2018, beef exports were up 10% in volume to 547,157 mt, while export value was $3.32 billion, 21% above last year’s record pace.

Data showed that exports accounted for 13.6% of total beef production in May, up from 13% a year ago. For muscle cuts only, the percentage exported was 11.1%, up from 10% last year. For January through May, USMEF said exports accounted for 13.5% of total beef production and 10.9% for muscle cuts – up from 12.8% and 10%, respectively, last year.

Beef export value averaged $313.39 per head of fed slaughter in May, up 18% from a year ago. The January to May average was $317.69 per head, also up 18%.

Following a record performance in April, USMEF said May pork export volume was 217,209 mt, down 2% from a year ago and reflecting smaller exports of variety meats. Export value was $562.5 million, down 3.5%. For January through May, pork export volume was still 3% ahead of last year’s record pace, at 1.08 million mt, while value increased 6% to $2.85 billion.

Exports accounted for 27.8% of total pork production in May, down from 29.5% a year ago, while the percentage of muscle cuts exported fell about one percentage point to 24%. For January through May, the percentage of total production exported was slightly below last year at 27.5%, while the percentage of muscle cuts exported increased slightly to 23.7%.

USMEF reported that May pork export value averaged $55.05 per head slaughtered, down 6% from a year ago. The January to May per-head average was $55.57, up 2% from last year.

Japan, Korea lead way for U.S. beef

Japan and South Korea continue to be the pacesetters for U.S. beef export growth, according to USMEF. In May, export volume to Japan totaled 30,117 mt, up 19% from a year ago, valued at $196.8 million, up 22% and the highest since August 2017. Through May, exports to Japan were up 4% from a year ago in volume to 128,207 mt, while value increased 13% to $822.9 million. This included a 6% increase in chilled beef volume to 61,178 mt, with the value up 18% to $488 million, USMEF noted.

May exports to Korea were up 46% from a year ago in volume to 20,781 mt and jumped 64% in value to a record $146.2 million. For January through May, exports to Korea climbed 34% to 91,875 mt and were valued at $647.3 million – 49% above last year’s record pace. Chilled beef exports to Korea totaled 20,365 mt, up 30%, and were valued at $196 million, up 41%.

“Despite the intense competition U.S. beef faces in Japan and Korea, these markets continue to display a terrific appetite for a growing range of cuts,” USMEF president and chief executive officer Dan Halstrom said. “Beef items that are traditionally popular in Asia continue to perform, and other items more suitable for thick-cut steaks and barbecue concepts are gaining more traction, resulting in exceptional growth opportunities, bu t the enthusiasm for U.S. beef extends well beyond these two leading markets, and that’s how exports have reached this record-breaking pace.”

According to USMEF, other U.S. beef highlights for January through May included:

  • In Mexico, exports were up 4% in volume to 98,900 mt and were 13% higher in value to $427.9 million. Mexico is a critical market for U.S. rounds, shoulder clods and other muscle cuts that are typically undervalued in the U.S. market, USMEF said, adding that Mexico is also the leading destination for U.S. beef variety meat exports, which increased 15% from a year ago in value to $98.9 million despite a 2% decline in volume to 43,479 mt.
  • Exports to China/Hong Kong increased 20% in volume to 57,186 mt and 47% in value to $442.2 million. May exports to China were the largest (834 mt) since the market opened in June of last year, pushing the January to May total to 3,133 mt valued at $28.7 million. However, effective July 6, China’s import duty rate on U.S. beef increased from 12% to 37%. USMEF said the higher tariff will make it difficult for end users in China to profitably utilize U.S. beef, especially since it already was priced at a premium compared to imports from other suppliers and with Australian beef subject to a duty of just 7.2% through the China-Australia Free Trade Agreement.
  • Coming off a record performance in 2017, beef exports to Taiwan continued to gain momentum. Exports were up 31% from a year ago in volume to 22,127 mt and were 43% higher in value to $209.9 million. Chilled exports increased 39% in volume to 9,272 mt and 52% in value to $116 million as U.S. beef captured 74% of Taiwan’s chilled beef market.
  • More reliable access to Indonesia has helped bolster beef exports to this promising market, with volume increasing 52% from a year ago to 6,247 mt and value nearly doubling to $28.7 million. Due, in part, to the U.S. successfully challenging Indonesia’s import restrictions at the World Trade Organization, USMEF said U.S. beef now faces fewer obstacles and a more consistent regulatory environment. Indonesia’s strong performance and solid growth in the Philippines helped push exports to the Association of Southeast Asian Nations (ASEAN) region 17% higher in volume to 18,472 mt and 28% higher in value to $102.4 million.
  • Led by strong growth in Guatemala, Costa Rica and Panama, exports to Central America jumped 21% in volume to 5,436 mt and 22% in value to $30.6 million versus a year ago.

Pork exports tested by tariffs

Mexico’s retaliatory duties on U.S. pork took effect in June, so January through May results were not directly affected, according to USMEF. May exports to Mexico increased 3% from a year ago in volume to 70,589 mt but slipped 11% in value to $115.6 million. Through the first five months of 2018, exports to Mexico were 6% above last year’s record volume pace at 353,264 mt, with value up 2% to $621 million.

On June 5, Mexico imposed a 10% duty on fresh/frozen pork muscle cuts from the U.S., and the rate increased to 20% on July 5. Also in June, Mexico imposed a 15% duty on U.S. pork sausages and a 20% duty on some prepared hams (these rates did not increase July 5) and opened a duty-free quota aimed at attracting imports from non-U.S. suppliers, according to USMEF.

USMEF said pork exports to the China/Hong Kong region were well below year-ago levels in May due partly to the additional 25% tariff imposed by China on April 2, although the increase does not apply to product entering Hong Kong. May exports to China/Hong Kong were 34,191 mt, down 31% from a year ago, while export value dropped 25% to $79.9 million. For January through May, exports to China/Hong Kong were 18% below last year’s pace in volume at 187,439 mt and were down 6% in value to $436.4 million.

“Exports to China will face an even steeper challenge in the second half of 2018 as China recently hiked the duty rate on U.S. pork by another 25%,” USMEF said, adding that U.S. pork cuts and pork variety meat entering China now face a duty of 62%, compared to 12% for China’s other suppliers, including the European Union, Brazil and Canada.

“It is unfortunate that U.S. pork is caught in the crosshairs of a dispute that has nothing to do with pork trade,” Halstrom said. “USMEF is focusing on the factors we can control by partnering with U.S. packers and exporters to make every effort to defend our market share and protect our business in Mexico and China. USMEF also consistently stresses the importance of diversifying our export markets and expanding U.S. pork’s footprint into emerging markets, and those efforts are more critical than ever.”

On the pork side, USMEF said January to May highlights for U.S. pork included:

  • As an outstanding destination for U.S. pork for further processing and value-added items destined for the home meal replacement sector, exports to South Korea continued to achieve impressive growth. May exports climbed 44% from a year ago in volume to 22,447 mt and rose 47% in value to $64.4 million. For January through May, exports to Korea totaled 117,335 mt, up 44%, and were valued at $340.6 million, up 54%.
  • Exports to leading value market Japan were 1% below last year in volume at 167,294 mt and were steady in value at $689.6 million. This included a 4% decrease in chilled pork, with value down slightly to $424 million.
  • Surging demand in Colombia and solid growth in Peru pushed pork exports to South America up 26% from a year ago in both volume, at 50,993 mt, and value, at $125.4 million. USMEF said Argentina officially opened to U.S. pork in April, but it has taken some time for exporters to complete various regulatory processes. Nonetheless, USMEF is optimistic that shipments to Argentina can begin soon.
  • Exports to Australia and New Zealand were up 8% in volume to 36,184 mt and were 11% higher in value to $107 million as the U.S. has gained market share in Oceania -- an increasingly important market for U.S. hams.
  • Led by strong year-over-year growth in Honduras, Panama, El Salvador and Guatemala, pork exports to Central America climbed 18% from a year ago in volume to 33,590 mt and 20% in value to $79.7 million. Coming off a record year in 2017, USMEF pointed out that exports to all seven Central American nations achieved double-digit growth in the first five months of 2018.
  • Exports to the Dominican Republic, which were record large in 2017, increased 19% through May in both volume, at 19,102 mt, and in value, at $42.4 million. For the Caribbean region, exports were up 13% in volume to 25,667 mt and 14% in value to $60.8 million.
  • With solid growth in the Philippines and Vietnam offsetting lower shipments to Singapore, pork exports to the ASEAN region increased 12% in volume to 20,630 mt and rose 24% in value to $57.4 million. Pork variety meat exports to the ASEAN region, which USMEF said are especially important when shipments to China are declining, increased 50% in volume to 6,827 mt and 58% in value to $12.5 million.
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