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Pork, beef exports hold their ground in May

AmyLaughinghouse_iStock_Thinkstock U.S. flag exports trade container ship port exports
January through May pork and beef export volumes still below last year's pace.

May exports of U.S. pork and beef were steady with last year’s strong volumes and increased year over year in value, according to data released by the U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation (USMEF).

Pork exports totaled 217,999 metric tons in May, steady with last year’s pace, while value increased 1% to $567.8 million – the highest monthly value total since April 2018. For January through May, pork exports were still 4% below last year in volume at 1.035 million mt and down 10% in value to $2.57 billion.

Pork export value averaged $54.83 per head slaughtered in May, which USMEF said was the highest monthly average since May 2018 ($55.05). For January through May, export value averaged $48.74 per head, down 12% from the same period last year. May exports accounted for 27.3% of total U.S. pork production and 23.2% for muscle cuts only, down from 27.8% and 24%, respectively, a year ago. For January through May, exports accounted for 25.4% of total pork production (down from 27.5%) and 22.1% for muscle cuts (down from 23.7%).

According to USMEF, May beef exports were also steady year over year in volume at 117,541 mt, while export value increased 1% to $727.6 million – the second highest on record, trailing only the August 2018 total of $751.7 million. For January through May, exports were 3% below last year’s record pace in volume at 530,088 mt but only slightly lower in value at $3.3 billion.

Beef export value per head of fed slaughter averaged $312.85 in May, down slightly from a year ago. For January through May, beef export value averaged $309.33 per head, down 3%. May exports accounted for 14.6% of total U.S. beef production and 12% for muscle cuts only, each down slightly from a year ago. For January through May, exports accounted for 14% of total production and 11.3% for muscle cuts – down from 14.6% and 11.9%, respectively, a year ago.

USMEF did note that due to a calculation error, the percentage of beef production exported was incorrectly reported from January 2017 through April 2019. However, the ratios have now been corrected and are about 1.1% higher than originally reported.

Rebound in Japan and China/Hong Kong

After trending lower through the first four months of 2019, USMEF reported that May pork exports to leading value market Japan increased 5% from a year ago in volume to 36,373 mt and 3% in value to $148.6 million, the highest in 18 months. Stronger May volumes included growth in chilled pork, up 2.5% to 19,795 mt. For January through May, exports to Japan were still 5% behind last year’s pace in volume at 159,539 mt and were down 7% in value to $642 million. Chilled exports held close to last year at 87,362 mt, down less than 1%, with value at $414.9 million, down 2%.

According to USMEF, Japan’s import data show that the biggest decrease from the U.S. is in ground seasoned pork, where the U.S. faces the full 20% duty while competitors pay 13.3%. Japan’s imports of U.S. pork fell $76 million through May, including a $46 million decrease in ground seasoned pork.

Despite the continued 50% retaliatory duty on U.S. pork going to China, May also brought an uptick in pork exports to China/Hong Kong, which increased 33% from a year ago in volume to 45,442 mt, USMEF reported. Value, on the other hand, increased 5% to $84 million. Through the first five months of 2019, exports to the region still trailed last year by 7% in volume at 173,642 mt and 25% in value at $326 million.

On May 20, the 20% retaliatory duty on most U.S. pork entering Mexico was removed as the U.S., Mexico and Canada reached an agreement on steel and aluminum tariffs. While the return to duty-free status is expected to fuel a rebound in pork exports to Mexico, it came too late to have much impact on May results, as exports fell 26% from a year ago in volume to 52,555 mt and 15% in value to $98.4 million. For January through May, exports to Mexico were down 19% in volume to 284,946 mt and 27% in value to $454.9 million.

“May export results for U.S. pork were very encouraging, especially the renewed momentum in Japan and China/Hong Kong,” USMEF president and chief executive officer Dan Halstrom said. “When exports to Mexico get back on track and trade talks with Japan and China show progress, this will be a very welcome lift for the U.S. pork industry.”

All major competitors to 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 European Union, making red meat trade a major focus of the ongoing U.S.-Japan trade agreement negotiations.

Access for U.S. agricultural products was also a priority in the high-level U.S.-China trade talks that broke off in early May but were expected to resume following President Donald Trump’s June 29 meeting with China's President Xi Jinping.

Other January-to-May highlights for U.S. pork include:

  • South America has been the leading growth market for U.S. pork by tonnage in 2019 as continued growth in Colombia and Chile pushed exports 40% above last year’s record pace in volume to 71,240 mt and 37% higher in value to $171.8 million. Exports to Peru cooled in May but remain significantly higher year over year.
  • Exports to Oceania continued to climb, increasing 45% in volume to 52,502 mt and 30% in value to $138.7 million from a year ago. Australia has been one of the top-performing markets U.S. pork in 2019, with volume up 45% from last year’s record pace to 48,110 mt and value increasing 29% to $125.4 million. The U.S. share of Australia’s imports climbed to 52%, compared to 45% last year. Exports to New Zealand were also significantly higher in both volume, up 43% to 4,392 mt, and value, up 33% to $13.3 million.
  • Also coming off a record year in 2018, exports to Central America climbed 11% in both volume -- to 37,416 mt -- and value -- to $88.2 million. While exports to leading market Honduras were up slightly from a year ago, double-digit growth was achieved in Guatemala, Panama, Costa Rica and Nicaragua.
  • While pork exports to Taiwan slowed in May, January-to-May volume still increased 60% from a year ago to 9,972 mt, while value was up 44% to $22 million.

Korea, Taiwan lead strong month for beef

According to USMEF, beef exports to South Korea remained on a record pace in May, climbing 11% in volume to 23,004 mt and 13% in value to $165 million. January-to-May exports to Korea were 11% above last year in volume at 101,761 mt and 15% higher in value at $743.5 million. With continued growth at retail and foodservice, the U.S. share of Korea’s chilled beef imports reached a post-bovine spongiform encephalopathy high of 61%, up from 57% last year and 52% in 2017. Chilled beef exports totaled 22,268 mt, up 8% year over year, valued at $224 million, up 12%.

Following a fairly steady first quarter, beef exports to Taiwan strengthened for the second straight month in May, rising 27% from a year ago to 5,873 mt, with value up 28% to $52.6 million. Through May, exports to Taiwan were 11% above last year’s record pace in volume at 24,478 mt and were 4% higher in value at $218.2 million.

Though slightly below last year’s level, USMEF reported that May export volume to leading market Japan rebounded to 29,749 mt, while value was down 3% to $190.8 million. Export volume through May was steady with last year’s pace at 128,045 mt, while value increased 1% to $828 million. This performance was driven, in part, by a large increase in beef variety meat exports (mainly tongues and skirts), which jumped 23% in volume to 24,135 mt and 20% in value to $157.5 million. Despite the tariff disadvantages, the U.S. share of Japan’s beef imports has held nearly steady this year at 41%, but with a level playing field, there will be tremendous opportunities for growth. For example, Japan’s imports of beef from Canada and Mexico increased 76% and 39%, respectively, through May.

“The explosive growth U.S. beef has achieved in Korea and Taiwan is a testament to the quality of the product and the outstanding customer base the U.S. industry has established over the years,” Halstrom said. “That same dynamic is present in Japan on an even larger scale, but for Japan to remain the ‘strong growth’ column, it is essential that we have market access comparable to our key competitors.”

According to USMEF, other January-to-May highlights for U.S. beef include:

  • Mexico has been a very solid market for U.S. beef in 2019. Although exports through May were 2% below last year’s pace at 97,102 mt, value increased 8% to $462.1 million. This was due to strong growth in muscle cut exports, which were up 7% from a year ago in volume to 59,357 mt and up 10% in value to $361.5 million.
  • Exports to the Dominican Republic remained on a tremendous roll, soaring 50% above last year’s record pace in volume to 3,741 mt and gaining 39% in value to $30.3 million. U.S. beef continues to capitalize on market access improvements secured in the Central America-U.S.- Dominican Republic Free Trade Agreement, with exports to Central America also increasing 5% from a year ago in volume to 5,699 mt and 10% in value to $33.8 million. Growth leaders in the region include Costa Rica, Guatemala, Honduras and Nicaragua.
  • January-to-May exports to Egypt, the largest destination for U.S. beef livers, were down 7% year over year in volume to 28,912 mt but increased 6% in value to $34.8 million. Exports strengthened in May, increasing 26% in volume to 6,224 mt and 35% in value to $7.1 million year over year. This was significant, as changes in Egypt’s halal certification process that took effect May 1 are a concern for the U.S. industry. These changes, at least so far, do not appear to be slowing exports, though.
  • Retaliatory tariffs in China and other market access challenges limited U.S. beef exports to China/Hong Kong, with January-to-May volume down one-third to 38,405 mt and value declining 27% to $322 million.
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