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U.S. pork exports strong, beef lower in August

Pork exports in August increased 22% from a year ago, and value climbed 19% despite tariffs.

U.S. pork exports continued to post very strong results in August, while beef exports were below the record-large totals of August 2018, according to data released by the U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation (USMEF).

August pork exports increased 22% from a year ago to 221,586 metric tons, while export value climbed 19% to $588.8 million. These results pushed January-to-August export volume 4% ahead of last year's pace to 1.7 million mt, while value increased 1% to $4.35 billion.

Pork export value in August averaged $54.18 per head slaughtered, up 22% from a year ago. For January through August, the per-head average was down 2% to $51.70. August exports accounted for 27.1% of total U.S. pork production and 23.7% for muscle cuts only, up significantly from a year ago (21.9% and 19.2%, respectively). January-to-August exports accounted for 26.4% of total pork production and 23% for muscle cuts, both up slightly year over year.

August beef exports totaled 114,119 mt, a 4% decline from last year's large volume, while export value of $690.3 million was down 8%. January-to-August beef exports were slightly below last year's record pace, declining 2% in volume to 881,526 mt and 1% in value to $5.44 billion.

Beef export value per head of fed slaughter averaged $298.94 in August, down 7% from a year ago, while the average through August was down 3% to $309.85. August exports accounted for 14% of total U.S. beef production and 11.3% for muscle cuts only, down from 14.3% and 12.2%, respectively, last year. Through the first eight months of the year, exports accounted for 14.2% of total beef production and 11.6% for muscle cuts, down from 14.6% and 12.1%, respectively, in 2018.

Emerging markets strong for U.S. pork

Although still held back by China's retaliatory duties, China/Hong Kong was the largest destination for U.S. pork in August, at 63,656 mt, more than triple the August 2018 volume, while export value climbed 160% to $137.6 million. For January through August, exports to China/Hong Kong were up 38% in volume to 356,322 mt and rose 17% in value to $717.9 million.

Since Mexico removed its 20% retaliatory duty on U.S. pork in late May, exports have rebounded significantly but are still trailing the record-large numbers posted in 2017. August exports to Mexico were down 1% year over year in volume to 61,365 mt, but value increased 18% to $121.1 million. A slow start to the year weighed on January-August exports to Mexico, which were down 11% from a year ago in both volume, at 473,309 mt, and value, at $821.8 million.

USMEF president and chief executive officer Dan Halstrom said, "China's demand for imported pork has increased steadily over the past few months, and the U.S. industry is well positioned to help fill that need, but the really positive story behind these numbers is that, even as U.S. exports to China/Hong Kong have surged and exports to Mexico rebounded after the removal of retaliatory duties, demand in other markets is proving resilient and continues to grow. This is exactly why the U.S. industry invested in emerging markets over the years, and it is definitely paying dividends."

The U.S. and Japan recently announced an agreement that will bring tariffs on U.S. pork in line with those imposed on major competitors, and August export results illustrated the pressing need for tariff relief.

August export volume to Japan was down 19% to 28,240 mt, while value fell 18% to $120.1 million. Through August, exports to Japan trailed last year's pace by 6% in both volume, at 250,540 mt, and value, at $1.03 billion. U.S. exports of ground, seasoned pork to Japan have been hit particularly hard by the tariff gap -- 20% for the U.S. versus 13.3% for the European Union and Canada -- with Japan's imports through August falling by 28% -- nearly $60 million -- compared to last year.

The following are January through August highlights for U.S. pork:

  • Exports to South America, led by steady growth in mainstay market Colombia and surging demand in Chile, climbed 28% above last year's record pace in volume to 105,344 mt and rose 30% in value to $264.7 million. Shipments to Peru cooled in August but have also contributed to export growth in 2019.
  • Exports to Central America rose 16% from last year's record pace in volume to 60,727 mt and were 19% higher in value at $147 million. Honduras and Guatemala are the largest Central American destinations for U.S. pork, and exports trended higher to both markets. Panama, Costa Rica and Nicaragua also contributed to regional growth, with exports increasing by double digits.
  • Exports to Oceania were up 38% from a year ago to 77,556 mt, while value increased 32% to $217.1 million. Exports to Australia, a key destination for hams and other muscle cuts used for further processing, jumped 36% from a year ago to 69,692 mt, with value up 31% to $192.5 million. Growth to New Zealand was also impressive, with exports up 52% in volume to 7,864 mt and value up 48% to $24.6 million.
  • While January-to-August exports to South Korea were down 9% from last year's record volume at 145,690 mt and fell 10% in value to $411.8 million, August exports were up significantly, as volume climbed 27% to 14,336 mt and value surged 35% to $42.2 million. In mid-September, South Korea confirmed its first cases of African swine fever (ASF), with 13 outbreaks reported in the northwestern corner of the country near the border with North Korea. While the disease is still confined to a relatively small area, ASF is certainly a pressing concern for Korea's domestic pork industry.
  • ASF has also affected pork production in Southeast Asia, especially in Vietnam but also recently spreading into the Philippines. While U.S. exports to the Association of Southeast Asian Nations (ASEAN) region trailed last year's pace by 10% in volume (35,164 mt) and 19% in value ($81.1 million), the region's need for imported pork is likely to trend higher in coming months.

U.S. beef exports cool in August but remain strong

After setting new value records in June and July, USMEF reported that U.S. beef exports to South Korea slowed 9% from a year ago in August to 22,307 mt, while value dropped 11% to $157.4 million. For January through August, however, exports to Korea were still 8% ahead of last year's record pace in volume at 174,290 mt and were 10% higher in value at $1.26 billion. Korean import data through August showed double-digit growth for U.S. beef in the top two cut categories: short rib and short plate/brisket. The U.S. accounted for more than 55% of Korea's chilled/frozen beef import volume, up from 53% in the first eight months of 2018.

Similar to pork, USMEF said the U.S. beef industry looks forward to gaining tariff relief in leading market Japan, where August exports slipped 15% from a year ago to 28,646 mt. Value was down 22% to $164.3 million, although it is important to note that exports in August 2018 were at a post-bovine spongiform encephalopathy record of $209.3 million. For January through August, exports to Japan were 3% below last year's pace in volume at 217,698 mt and were 4% lower in value at $1.36 billion. Beef variety meat exports to Japan -- mainly tongues and skirts -- have been a bright spot in 2019, increasing 31% in volume to 44,617 mt and 18% in value to $260 million. U.S. tongues and skirts face higher duty rates than competitors' products but are at a tariff level of 12.8%, compared to 38.5% for U.S. muscle cuts.

"The U.S. beef industry is extremely excited at the prospect of lower tariffs in Japan, as 38.5% is the highest rate assessed in any major market," Halstrom said. "As we've seen in Korea, where the tariff rate was once 40% but has been reduced by more than half, lower tariffs make U.S. beef even more affordable for a wider range of customers. While the agreement still needs parliamentary approval in Japan, importers are already enthused and preparing for long-awaited tariff relief."

January-to-August beef exports to China/Hong Kong fell 24% from a year ago in volume to 60,259 mt and dropped 20% in value to $510.7 million.

“Several factors have impacted U.S. exports to the region, including street protests in Hong Kong that have slowed commerce and tourism,” USMEF reported. “While supermarket sales remain strong in Hong Kong, the disruption has been particularly hard on the restaurant sector.”

Although China remains a small destination for U.S. beef and exports are hampered by China's retaliatory duties, volume through August increased 23% from a year ago to 5,625 mt, with value up 12% to $44.7 million.

The following are January-to-August highlights for U.S. beef:

  • Exports to Mexico, the third-largest international market for U.S. beef, were slightly lower than a year ago in volume, at 156,528 mt (down 1%), but value increased 5% to $729.5 million. Beef variety meat exports to Mexico were down 3% from a year ago to 62,504 mt but commanded better prices as export value increased 12% to $166 million.
  • Although beef exports to Taiwan were modestly lower year over year in August, January-to-August exports were still 10% above last year's record pace in volume, at 42,785 mt, and were 7% higher in value, at $383.9 million.
  • Led by surging demand in Indonesia and solid growth in the Philippines and Vietnam, beef exports to the ASEAN region were 27% above last year's pace in volume, at 37,206 mt, and 12% higher in value, at $180.6 million.
  • Strong August results in Central America pushed exports 4% above last year's volume to 9,898 mt and 10% higher in value to $56.7 million, led by a strong performance in Panama and steady growth in Guatemala and Honduras.
  • Beef exports to the Dominican Republic continued to reach new heights, as volume increased 45% from a year ago to 6,060 mt, while value climbed 35% to $48.6 million.

Halstrom noted that the temporary loss of a major U.S. beef processing plant due to a fire likely had a negative effect on August exports, but he does not expect to see a lasting impact.

"Beef supplies are tight throughout the world, but the U.S. maintains a supply advantage, as production is expected to be record large in 2020," he said. "Both domestic and international demand for U.S. beef remains strong, and there is significant potential for further export growth, especially once the U.S.-Japan agreement is implemented."

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