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Pork, beef exports have tough month in June

USMEF anticipated bigger rebound from low May export totals, especially for beef.

June exports of U.S. pork fell below year-ago levels for the first time this year, but exports remain on a record pace in 2020, according to data released by U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation (USMEF). Beef exports were down sharply from a year ago in June, reflecting the lingering impact of a temporary slowdown in beef production combined with restrictions on foodservice and weakening economies in major import markets.

USMEF president and chief executive officer Dan Halstrom said, "We expected that the interruptions in red meat production would continue to weigh on June exports but anticipated more of a rebound from the low May totals -- particularly for beef -- but it takes time for the entire chain to adjust to supply shocks, and thus, it was another difficult month for exports. However, weekly U.S. export data suggest an upward trend in demand in most markets, and with production recovering, the U.S. has regained its supply advantage. So, we expect beef and pork exports to regain momentum in the second half of the year."

June pork exports totaled 207,181 metric tons, down 3% from a year ago, while export value fell 9% to $516.3 million. Exports continued to trend higher than a year ago to China/Hong Kong but were the lowest since October. Exports also increased year over year to the Association of Southeast Asian Nations (ASEAN) region, the Caribbean, Honduras and Taiwan and were sharply higher for Albania and Ukraine, while shipments trended lower to Mexico, Japan, South Korea and South America. Despite the June decline, first-half pork exports were still 24% ahead of last year's record pace in volume, at 1.55 million mt, and 29% higher in value, at $4.05 billion.

Exports accounted for 24% of total pork production in June and 22.2% of muscle cut production, down substantially from 27.8% and 24%, respectively, a year ago. For the first half of the year, exports accounted for 31.5% of total pork production and 28.6% for muscle cuts, up from 25.8% and 22.4%, respectively, last year. Export value per head slaughtered averaged $46.19 in June, down 19% from a year ago and down sharply from the high levels achieved in April and May. The January-to-June average was $63.61 per head, up 27% from a year ago.

June beef exports were close to the May lows, down 33% from a year ago to 79,013 mt, with value falling 32% to $492.3 million. Exports were below year-ago levels to most markets but trended higher to Canada, China and South Africa. For January through June, beef exports fell 9% below last year's pace in volume to 591,609 mt and were 10% lower in value at $3.63 billion.

Exports accounted for 9.7% of total beef production in June and 8% for muscle cuts, down sharply from 15.4% and 12.7%, respectively, a year ago and the lowest in 10 years. First-half exports accounted for 13.3% of total beef production and 10.9% for muscle cuts, down from 14.2% and 11.6%, respectively, last year. Beef export value per head of fed slaughter averaged $219.53 in June, down 32% year over year. The first-half average was $300.43 per head, down 4%.

China’s moderating pork demand highlights importance of diversity

According to USMEF, June pork exports to China/Hong Kong totaled 77,883 mt, up 55% from a year ago but the lowest since October. Export value was $168.3 million, up 65%. This pushed first-half exports to China/Hong Kong 170% above last year’s pace at 604,156 mt, with value up 232% to $1.42 billion.

“With China’s pork industry still dealing with the impact of African swine fever (ASF), we expect demand from China/Hong Kong to remain strong through the end of this year and into 2021, but the unprecedented volumes of imported pork entering China – not only from the U.S. but other suppliers as well – will begin to moderate,” Halstrom explained. “This underscores the importance of maintaining strong demand in other key markets and continuing to develop new destinations for U.S. pork.”

While June pork exports to Mexico remained below last year -- with volume down 19% to 48,658 mt and value down 41% to $70.6 million, USMEF said shipments rebounded to some degree from the low totals seen in May. First-half exports to Mexico were 6% below last year’s pace at 324,481 mt, with value down 5% to $543 million.

June exports to Japan, which is traditionally the leading value market for U.S. pork, were down 25% from a year ago to 23,910 mt, with value down 17% to $109.6 million. Through June, however, exports to Japan remained 1% above a year ago in volume at 193,822 mt and 5% higher in value at $813.6 million. Even as U.S. slaughter levels rebound, limited labor availability has restricted production of value-added and boneless cuts as well as some variety meats, USMEF noted, explaining, “This is especially challenging for serving markets such as Japan, which demands value-added cuts like single-ribbed bellies.”

China, Canada among few bright spots for beef exports

Capitalizing on the recently implemented U.S.-China Phase One Economic & Trade Agreement, June beef exports to China climbed 125% from a year ago to 1,986 mt, with value up 111% to $15.2 million. This pushed first-half exports to China 80% above last year’s pace in both volume, at 6,912 mt, and value, at $54.1 million.

“While Phase One was signed in January, the red meat trade provisions weren’t implemented until late March,” Halstrom noted. “That’s when beef from a larger percentage of U.S. cattle became eligible, and more establishments were approved for export to China. So, U.S. beef exports are really just beginning to scratch the surface in the world’s largest import market. As China’s foodservice sector gradually recovers from COVID-19 restrictions and as Australia’s export volumes remain limited, the potential for growth will increase even further.”

Following a down year in 2019, first-half beef exports to Canada increased 13% to 55,099 mt, with value up 14% to $370 million. USMEF said exports last year were held back somewhat by retaliatory duties on prepared beef products, which were removed in May 2019. Canada is the largest destination for U.S. exports in this category. Beef variety meat exports to Canada were particularly strong in the first half, increasing 35% in volume to 4,983 mt, with value up 56% to $10.5 million.

June beef exports to leading market Japan rebounded to some degree from the low totals posted in May but were still well below last year, dropping 30% to 20,743 mt, with value down 20% to $143.7 million. First-half exports fell 2% below last year’s pace in both volume, at 154,881 mt, and value, at $985.5 million.

After racing to a strong start in 2020, exports to South Korea have fallen 8% from last year’s record pace to 116,724 mt, with value at $828.3 million. U.S. beef has a very strong retail presence in Korea, which has helped offset some of the sharp COVID-19-related decline in foodservice demand.

A complete summary of June results can be found here.

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