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U.S. pork, beef exports have strong first half of 2019

Pork exports catch a break after Mexico removes retaliatory tariff on U.S. pork.

U.S. pork and beef exports were above year-ago levels in both volume and value in June, according to data released by the U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation (USMEF). Led by a rebound in Mexico and China, pork export value was the highest in 14 months, while strong results in South Korea and Taiwan pushed beef export value to the fourth-highest total on record.

According to USMEF, June pork exports posted double-digit gains in both volume and value, reaching 212,887 metric tons, up 11% year over year, valued at $569.2 million, up 12%. For the first half of 2019, pork exports remained 2% below last year in volume, at 1.25 million mt, and dropped 6% in value to $3.14 billion.

Pork export value averaged $56.99 per head slaughtered in June, up 7% from a year ago and the highest monthly average since April 2018. First-half export value averaged $50.05 per head, down 9% from the same period last year. June exports accounted for 27.8% of total U.S. pork production and 24% for muscle cuts only, up from 25.8% and 22.4%, respectively, a year ago. For January through June, exports accounted for 25.8% of total pork production, down from 27.3%, as well as 22.4% for muscle cuts, down from 23.6%.

Beef exports were up 3% year over year in June to 118,677 mt. Export value of $724.8 million was up just 1% from a year ago but trailed only August 2018, May 2019 and October 2018 for the highest monthly value total on record. First-half beef exports were down 2% from a year ago in volume to 648,765 mt but held steady with last year's record pace at $4.03 billion.

Beef export value per head of fed slaughter averaged $325.10 in June, up 4% from a year ago, while first-half export value averaged $312.06 per head, down 2%. June exports accounted for 15.4% of total U.S. beef production, up nearly a full percentage point from last year. For muscle cuts only, exports accounted for 12.7% of production — up from 12.3% last year and the highest ratio since July 2018. For the first half of the year, exports accounted for 14.2% of total production and 11.6% for muscle cuts — down from 14.6% and 11.9%, respectively, a year ago.

Pork exports find support from Mexico, China

USMEF noted that the 20% retaliatory duty on most U.S. pork exports to Mexico was removed on May 20 as the U.S., Mexico and Canada reached an agreement on steel and aluminum tariffs. With pork entering Mexico duty free for the first time in nearly a year, June exports to Mexico, at 59,837 mt, were the largest since January and were steady year over year, while value climbed 13% to $119 million — the highest since April 2018.

"It's a tremendous relief to have Mexico's retaliatory duties on U.S. pork behind us, as the June bump in export value clearly illustrates," USMEF president and chief executive officer Dan Halstrom said. "Now, the goal is to get back to the record-setting trend the U.S. industry established in Mexico from 2012 through 2017, prior to the metal tariff dispute. USMEF's marketing programs have ramped up in Mexico so that we can recapture lost market share and regain momentum in this critical market for U.S. pork."

Despite retaliatory duties remaining in place, USMEF said June also brought an encouraging rise in pork exports to China, which were the largest in more than three years, at 41,704 mt, up 123% year over year, with value at $88.5 million, up 77%. This pushed first-half exports to China 23% ahead of last year in volume to 177,060 mt and 3% higher in value to $353.1 million.

For the China/Hong Kong region, first-half exports were up 4% to 224,009 mt, but value declined 16% to $427.8 million. The European Union remains the primary pork supplier to China/Hong Kong. Through May, EU exports to the region were 859,030 mt, up 27% year over year, valued at $1.57 billion, up 34%. China/Hong Kong has accounted for 52% of EU export volume in 2019, compared to 18% of U.S. export volume.

According to USMEF, all major competitors of U.S. pork and beef gained tariff relief in Japan this year through the Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the economic partnership agreement between Japan and the EU, making red meat trade a major focus of the U.S.-Japan trade agreement negotiations that continue.

Japan is the leading value destination for U.S. pork, and June exports were steady with last year in both volume, at 31,742 mt, and value, at $131.5 million. For the first half of the year, exports to Japan were 4% below last year's pace in volume, at 191,281 mt, and were down 6% in value to $773.5 million. Japan's imports of chilled U.S. pork were down just 1% in volume to 100,869 mt and down 2.5% in value to $481 million, but imports of U.S. ground seasoned pork fell 24% to 41,769 mt, with value down 33% to $109.5 million. The U.S. share of Japan's ground seasoned pork imports was 58%, down from 67% last year and nearly 75% in 2017.

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

  • Despite a June slowdown, first-half exports to Colombia were still up 20% from a year ago in volume to 55,148 mt and rose 13% in value to $118.8 million. Combined with excellent growth in Chile and Peru, exports to South America climbed 35% above last year's record pace in volume to 84,032 mt and were 34% higher in value at $205.4 million.
  • Australia has been a top-performing market for U.S. pork in 2019, with first-half volume up 44% to 56,338 mt and value increasing 32% to $150.1 million. With exports to New Zealand also increasing significantly this year, exports to Oceania climbed 43% from a year ago in volume to 61,597 mt and were up 32% in value to $166.4 million.
  • In Central America, where pork exports set new records in 2018, first-half volume was up 11% to 44,614 mt, while value increased 12% to $106.8 million. Exports to leading market Honduras were up slightly from a year ago, while strong growth was achieved in Guatemala, Panama, Costa Rica and Nicaragua.

Korea, Taiwan lead beef export growth

Last year, South Korea surpassed Mexico as the second-largest destination for U.S. beef exports, and in 2019, it continues to close the gap on leading market Japan, USMEF reported. Exports to Korea remained at a record pace in June, increasing 2% from a year ago to 25,118 mt, which USMEF said is a post-bovine spongiform encephalopathy high. Value also climbed, up 15% to a record $178.3 million. These results pushed first-half exports to Korea 12% above last year in volume to 126,879 mt and 15% higher in value to $921.8 million. U.S. beef now accounts for 61% of Korea's chilled beef imports, up from 57% in the first half of last year, with chilled volume increasing 7% to 26,537 mt.

Beef exports to Taiwan finished a very strong second quarter, with June shipments reaching a new monthly high of 6,654 mt, up 40% from a year ago, with value up 46% to $58 million and the second highest on record. First-half exports to Taiwan were 16% above last year's record pace in volume at 31,132 mt and rose 11% in value to $276.2 million.

However, U.S. beef still faces a significant tariff rate disadvantage in leading market Japan, where June exports totaled 29,794 mt, down 4% year over year, with value down 7% to $179 million. For the first half of the year, exports to Japan were 1% below last year's pace in both volume, at 157,839 mt, and value, at just over $1 billion. Japan's imports of Australian beef have also slowed this year, but first-half imports from Canada, New Zealand and Mexico were up 83%, 37% and 28%, respectively, offering a glimpse of the upside opportunities in the market when tariff rates are lowered.

"It is very gratifying to see U.S. beef posting such remarkable gains in Korea and Taiwan, and the $2 billion milestone could even be in play this year for Korea," Halstrom said. "Exports to Japan can definitely achieve a similar trajectory if the U.S. can get back on a level playing field with our competitors, so we are encouraged by the progress in the U.S.-Japan trade negotiations."

Other first-half highlights for U.S. beef included:

  • June exports of beef variety meat were the largest in two years, at 28,195 mt, up 13% from a year ago, while value also climbed 13% to $79.7 million. This pushed first-half export volume to 158,466 mt, even with last year, while value increased 8% to $472.9 million. The large June increase was primarily driven by growth in Japan and Indonesia, while exports to Egypt rebounded from last year's low levels.
  • Although first-half export volume to Mexico was down 3% year over year to 114,541 mt, export value increased 6% to $539.1 million. Beef muscle cut exports to Mexico slowed in June but still finished the first half 4% higher than a year ago in volume at 70,333 mt and 8% higher in value at $422 million.
  • U.S. beef muscle cuts also have a rapidly growing presence in Colombia, where first-half muscle cut exports increased 29% from a year ago in volume to 1,919 mt and rose 36% in value to $11.2 million. Combined, beef and beef variety meat exports to Colombia were up 1% from a year ago to 2,991 mt, while value climbed 27% to $12.4 million. First-half exports to Chile, the top South American market for U.S. beef, increased 5% to 6,144 mt, with value up 7% to $34.3 million.
  • The Dominican Republic has emerged as a strong growth market for U.S. beef, with first-half exports soaring 57% above last year's record pace in volume to 4,524 mt and gaining 47% in value to $36.2 million.

Fueled by strong growth in the Philippines and Indonesia, first-half exports to the Association of Southeast Asian Nations region increased 23% from a year ago in volume to 26,711 mt and 8% in value to $132.4 million.

Market recap

October live cattle futures contracts extended losses early in the week but found some support by midweek. Contracts closed lower Tuesday at $106.225/cwt. but higher Thursday at $106.75/cwt.

September feeder cattle futures were mostly higher, closing Monday at $139.40/cwt. and Thursday at $139.875/cwt.

The Choice cutout closed higher Thursday at $216.88/cwt., while Select closed lower at $192.37/cwt.

October lean hog futures were mostly higher this week after plummeting last week. Contracts closed Monday at $67.425/cwt. and Thursday at $67.875/cwt.

The pork cutout was mostly higher this week, with the wholesale pork cutout closing higher at $88.69/cwt. Loins were higher at $75.69/cwt., but hams finished lower at $84.05/cwt. Bellies continued to rally higher, closing at $161.24/cwt.

Hogs delivered to the western Corn Belt were lower, closing Thursday at $72.19/cwt.

The U.S. Department of Agriculture reported the Eastern Region whole broiler/fryer weighted average price on Aug. 2 at 83.50 cents/lb.

According to USDA, egg prices were steady, with a steady to higher undertone. Offerings were light to, at times, moderate. Demand was moderate to fairly good.

Egg prices have been steady, with a steady to firm undertone. Large eggs delivered to the Northeast were unchanged at 48-52 cents/doz. Prices in the Southeast and Midwest were also unchanged at 48-51 cents/doz. and 40-43 cents/doz., respectively. Large eggs delivered to California were $1.00/doz.

For turkeys, USDA said the market was steady to firm, and demand was light to moderate. The price range for hens and toms was slightly higher, at 85-95 cents/lb.

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