March beef exports set new value record

Pork exports to two main markets moderate in March.

May 7, 2018

9 Min Read
March beef exports set new value record
Port of Los Angeles

Strong March results capped an excellent first quarter for U.S. red meat exports, as beef exports set a new monthly value record in March and pork export value reached the second-highest level on record, according to data released by the U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation (USMEF).

“The United States is exporting a strong share of its beef and pork production at higher prices – a clear sign of solid international demand,” USMEF said.

The data show March beef export value at $693.1 million, up 18% year over year and topping the previous high set in October 2014. Export volume was 111,994 metric tons, up 6% from a year ago. For the first quarter of 2018, exports were 9% ahead of last year’s pace in volume at 318,073 mt and jumped 19% in value to $1.92 billion.

Exports accounted for 13.6% of total beef production in March, up nearly a full percentage point from a year ago. For muscle cuts only, the percentage exported was 11.1% – up from 9.9% last year. For January through March, exports accounted for 13.2% of total production and 10.7% for muscle cuts, up from 12.4% and 9.8%, respectively.

Beef export value averaged $332.89 per head of fed slaughter in March, up 23% from a year ago, USMEF reported. For the first quarter, per-head value averaged $315.67, up 18%.

On the pork side, March export volume was steady with last year at 227,363 mt, while value increased 4% to $610.4 million – trailing only the November 2017 record of $615.8 million. For the January-to-March quarter, volume increased 1% year over year to 636,297 mt, while value was up 8% to $1.7 billion.

Exports accounted for 27.5% of total pork production in March, down from 28% a year ago, while the percentage of muscle cuts exported increased slightly to 23.5%. First-quarter exports followed a similar pattern, accounting for 26.6% of total production,  down from 27% a year ago, and 23% for muscle cuts only,  up from 22.6% last year.

March pork export value averaged $56.91 per head slaughtered, up 4% from a year ago, while the January-to-March average increased 5% to $54.81.

Asian, Latin American markets drive big jump for beef

March beef exports to leading market Japan were steady with last year’s pace at 28,158 mt, while value increased 6% to $177.5 million. For the first quarter, exports to Japan were down 3% in volume to 72,440 mt but still increased 8% in value to $459.5 million. This included a 6% increase in chilled beef to 35,290 mt that was valued at $275 million,  up 18%.

USMEF noted that March was the final month in which a higher safeguard tariff rate was applied to Japan’s imports of frozen U.S. beef (50% versus the normal 38.5%). The higher rate took effect in August and expired on April 1 with the beginning of Japan's new fiscal year.

"While beef exports to Japan held up well during those eight months, the higher tariff rate certainly weighed on exports of frozen cuts such as short plate," USMEF president and chief executive officer Dan Halstrom explained. “U.S. short plate is an essential ingredient for Japan’s gyudon restaurants, which are part of a highly competitive fast-casual dining sector. We are pleased to have the higher safeguard tariff rate behind us, though U.S. beef still faces a widening tariff rate gap in Japan compared to Australian beef, and U.S. beef remains subject to Japan’s quarterly safeguard mechanisms for chilled and frozen imports.”

USMEF said it will continue to monitor the situation and is hopeful that the frozen beef safeguard will not be triggered this year.

Through an economic partnership agreement (EPA), Australian beef entering Japan is subject to tariff rates of 26.9% for frozen cuts and 29.3% for chilled beef, while the rate for beef from most other suppliers is 38.5% (Mexico’s EPA rate is 30.8%). Imports from EPA suppliers also are not subject to Japan’s quarterly safeguards. Australia’s tariff rates decline annually until they reach a floor of 19.5% for frozen and 23.5% for chilled but will be phased down to 9% once the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is implemented. Japan’s beef imports from Canada, New Zealand, Mexico and Chile will receive the same benefits under this agreement.

Conversely, USMEF explained that U.S. beef enjoys a tariff rate advantage in South Korea under the Korea-U.S. Free Trade Agreement, which has helped push its presence in Korea to new heights as U.S. beef drives overall consumption growth in Korea and especially the soaring appetite for steaks. Through the first quarter, export volume to Korea was 22% ahead of last year’s pace at 51,909 mt, while value increased 37% to $366.3 million. Chilled beef exports to Korea accelerated at an even faster rate, increasing 34% from a year ago in volume to 11,408 mt and rising 44% in value to $107.9 million.

According to USMEF, other first-quarter highlights for U.S. beef exports included:

  • Exports to Mexico were steady with last year in volume at 57,039 mt and climbed 10% in value to $250.3 million. Mexico is the leading volume destination for U.S. beef variety meat, including tripe, hearts, kidneys and livers, USMEF said. While first-quarter variety meat exports to Mexico declined 4% in volume to 25,921 mt, they still achieved a 17% increase in value to $60.5 million.

  • In Taiwan, exports increased 34% year over year in volume to 13,067 mt and 48% in value to $126.7 million. This included a 61% increase in chilled beef export volume to 5,860 mt, valued at $74.4 million,  up 72%. The U.S. holds 74% of Taiwan’s chilled beef market, the highest of any Asian destination, USMEF noted.

  • Exports to China/Hong Kong climbed 34% in volume to 35,060 mt and 61% in value to $269.1 million. Weekly data show that shipments to China cooled in April following China’s proposed tariff increase on a number of U.S. products, including beef. “Although these tariffs have not been implemented, the threat of a possible increase has added uncertainty to the Chinese market, which reopened to U.S. beef in June 2017,” USMEF said.

  • Fueled by rapid growth in Indonesia, beef exports to the Association of Southeast Asian Nations (ASEAN) region reached 11,157 mt,  up 55% year over year, valued at $61 million,  up 46%. Exports also increased to the Philippines and Vietnam.

  • Strong performances in Chile and Colombia pushed beef exports to South America 42% higher in volume to 7,006 mt and 46% higher in value to $34.3 million. Exports to Peru trended lower in volume but still increased in value.

  • First-quarter demand was very strong in Guatemala as beef exports increased 56% in volume to 1,424 mt and 45% in value to $8.4 million. Exports to the Central American region were up 15% in volume to 3,145 mt and up 17% in value to $17.8 million.

  • Beef muscle cuts continued to make inroads in Africa, where first-quarter exports were up 27% in volume to 4,340 mt and 88% in value to $6.7 million. While last year’s exports to Africa were almost entirely beef variety meat, muscle cuts now account for nearly 30% of export volume and 60% of export value.

First-quarter pork exports up sharply to Korea, Latin America

March pork exports to leading volume destination Mexico were below last year’s level in volume at 66,136 mt, down 4%, and value at $120.3 million, down 5%. For the first quarter, exports were down just 1% from last year’s record pace in volume to 203,656 mt and were steady in value at $371.3 million.

Exports to Japan, the leading value market for U.S. pork, followed similar trends as March exports slowed 10% in volume to 33,969 mt and 11% in value to $138.6 million. For January through March, however, exports to Japan were steady, with volume at 101,435 mt and value up 2% to $419.7 million. This included a 5% decline in chilled pork to 53,688 mt. Chilled pork value was down slightly at $258.6 million.

“While exports to these two mainstay markets moderated in March, they still posted a strong first-quarter performance,” Halstrom said. “Mexico continues to be a critically important destination for U.S. hams, while Japanese demand is very strong for U.S. loins. In both cases, USMEF works closely with processors, retailers and other key buyers to develop new products and new menu ideas that will further expand consumers’ interest in these items.”

Other first-quarter highlights for U.S. pork included:

  • South Korea’s demand for U.S. pork is booming, as exports climbed 36% from a year ago in volume to 69,518 mt and were up 47% in value to $202 million. USMEF is helping position U.S. pork in all sectors, but Korea’s rising pork consumption is especially evident in sales of home meal replacement items and convenience foods.

  • With China’s rising domestic hog production and falling prices dampening demand for imported pork, export volumes to China/Hong Kong slowed 15% from a year ago to 111,681 mt. However, first-quarter export value still increased 1% to $260.7 million. China’s additional 25% tariff on imports of U.S. pork, imposed in retaliation for U.S. tariffs on steel and aluminum, took effect April 2, and therefore, any trade impact was not reflected in the first-quarter results, USMEF explained.

  • Strong growth in Colombia pushed exports to South America 22% higher than a year ago in volume to 29,126 mt and 24% higher in value to $70.8 million. Exports to Chile dipped slightly in volume but were still higher in value year over year, USMEF said. Argentina officially opened to U.S. pork in April, but shipments have not yet begun as exporters work through regulatory requirements.

  • Volumes increased to traditionally reliable markets Honduras and Guatemala, as exports to Central America were up 16% from a year ago in volume to 18,605 mt and 22% in value to $45 million. USMEF said the region got an even stronger boost from smaller markets as exports jumped sharply to Panama, El Salvador and Nicaragua.

  • Coming off a record year, demand for U.S. pork in the Dominican Republic continues to gain momentum, with exports increasing 23% in volume to 9,578 mt and 25% in value to $21.5 million. This pushed first-quarter exports to the Caribbean up 13% in volume to 13,439 mt and 16% in value to $32.5 million.

  • Steady growth in the Philippines and sharply higher results in Vietnam and Singapore moved pork exports to the ASEAN region 21% higher in volume to 10,634 mt and 32% higher in value to $29.5 million.

  • Exports to Taiwan, which rebounded last year following a down year in 2016, continued to regain momentum in the first quarter. Exports increased 40% year over year in volume to 3,603 mt and 45% in value to $9.1 million.

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