After an encouraging performance in April, exports of U.S. beef and pork lost momentum in May, falling below year-ago levels in both volume and value, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).
Beef exports moved counter-seasonally lower in May, dropping 14% from a year ago to 88,466 metric tons (mt). Export value dipped lower year-over-year for the first time since January, reaching only $556.7 million (down 6%). For January through May, exports totaled 430,393 mt, down 10% from the same period in 2014. Export value remained ahead of last year’s pace at $2.68 billion (up 2%).
January-May beef exports equated to 13 % of total beef production and 10% for muscle cuts only – down from 14% and 10.6%, respectively, last year. Export value per head of fed slaughter averaged $291.70, up 9% from a year ago.
Pork exports totaled 184,865 mt in May, down 2 % from a year ago, while value slipped 18% to $489.2 million. Through the first five months of 2015, pork exports were down 6% in volume (910,967 mt) and 15% in value ($2.42 billion) from the same period last year.
January-May pork exports equated to 25% of total production and 21 % for muscle cuts only – down from 28% and 23%, respectively, a year ago. Pork export value per head slaughtered averaged $51.39, down 19% from the first five months of 2014.
Korea a bright spot for U.S. beef
Beef exports to South Korea remained strong in May, increasing 5% from a year ago in volume (9,740 mt) and 11% in value ($64.8 million). This pushed January-May exports to Korea 4% higher in volume (48,568 mt) and 9% higher in value ($341.9 million). USMEF said the market could see a short-term slowdown, however, due to the toll the recent outbreak of Middle East respiratory syndrome (MERS) has taken on consumer spending in Korea. MERS was first diagnosed in Korea on May 20, but became a major public health concern in early June.
“Although MERS is not a food safety issue, its impact on Korea’s restaurant sector was dramatic in June,” explained Philip Seng, USMEF president and chief executive officer. “Fortunately our staff in Korea reports that the situation has improved significantly this month, with consumer activity beginning to return to normal. We expect beef demand in the Korean market – which is one of our strongest performers in 2015 – to rebound fairly quickly.”
Another bullish factor is Korea’s domestic beef prices, which soared to near-term highs in June, reflecting relatively tight supplies, USMEF said.
Results for U.S. beef in other Asian markets have been mixed so far in 2015, said USMEF, with most struggling to keep pace with last year’s import volumes. Exports to Japan slumped in May, falling 10% from a year ago in volume (17,964 mt) and 15% in value ($106.9 million). Through May, exports to Japan remained modestly higher than a year ago at 88,936 mt (up 2%) valued at $564.6 million (up 3%).
According to USMEF, other January-May results for U.S. beef included:
· Exports to Hong Kong fell 17% in volume (49,264 mt) and 8% in value ($370.4 million).
· Export value to Taiwan managed a solid increase ($117.5 million, up 13%) despite a 5% decline in volume (12,321 mt).
· Although exports to the ASEAN region were down 23% in volume (9,155 mt), export value was still up 14% to $63.5 million. Major destinations performed well, with exports exceeding year-ago levels to the Philippines, Vietnam and Singapore. The regional drop in export volume was mostly due to a sharp decline in exports to Indonesia (624 mt, down 85%), driven in large part by restrictive import regulations and a severely weakened currency.
While beef export value has managed to stay in positive territory in most Asian markets, Seng cautioned that the U.S. industry faces a volatile business climate.
“Lack of access to China, which never reopened after the 2003 BSE case, is definitely holding back our export growth,” he said. “China is a burgeoning market that impacts prices and product flow throughout a large region and its influence on global beef trade is growing rapidly. Exporting to China would significantly expand the presence of U.S. beef in Asia, but we remain on the sidelines as our competitors gain a stronger foothold.”
Just four years ago, China’s beef imports totaled only $112 million for an entire calendar year. Through May of this year, imports exceeded $700 million – a 17% increase from the record pace of 2014. Primary suppliers are Australia, Uruguay, New Zealand and Argentina.
Pork exports Japan, Mexico decline
After a relatively strong performance in April, pork exports to Japan and Mexico took a step back in May, USMEF reported.
Export volume to Japan dipped 9% from a year ago to 39,340 mt, while value decreased 18% to $152.9 million. Through the first five months of the year, exports to Japan were down 11% in volume (189,188 mt) and 18% in value ($705.2 million).
May exports to Mexico were the lowest in 19 months at 53,186 mt, 6% lower than a year ago. Export value fell by nearly one-third to $95.1 million. For January through May, exports to Mexico remained 5% ahead of last year’s pace in volume (291,184 mt) but decreased 17% in value ($508.7 million), reflecting the decline in pork prices from last year’s record levels.
Other January-May results for U.S. pork included:
· Exports to Korea cooled slightly in May but remain on a very strong pace, with volume up 38% to 95,686 mt and value up 37% to $285.1 million. Pork demand also took a short-term hit due to MERS, but USMEF said it should be strong in coming months as domestic production is taking longer than expected to recover from the impact of recent outbreaks of PEDV and FMD. Korea’s domestic pork carcass prices edged slightly lower June but still averaged $2.40 per pound – among the highest in the world.
· Growth to Honduras and Guatemala offset smaller volumes to Colombia, resulting in steady volume to Central/South America (51,257 mt). Export value was down 3% to $132.8 million. The outlook for this region looks positive as exports to Colombia gained momentum in May and shipments to Honduras and Guatemala have surged even higher in recent weeks.
· Limited access to China, which only a small number of U.S. pork plants are eligible to serve, continues to dampen exports to the China/Hong Kong region – a critical destination for selected pork and pork variety meat items, especially with China’s hog prices hitting multi-year highs, USMEF noted. Export volume decreased 21% from a year ago to 130,525 mt and value fell 26% to $273.6 million. The European Union is dominating the region’s imported pork market, accounting for nearly 70% of pork entering China/Hong Kong.
· Exports to the ASEAN region were down sharply, falling 51% in volume (16,200 mt) and 58% in value ($35.5 million) on lower shipments to the Philippines and Singapore.
“The tremendous influx of lower-priced European pork has reshaped the competitive landscape in Asia,” Seng noted. “The European industry has aggressively targeted Japan and China, successfully capturing market share. But we’re also seeing a significant impact in smaller markets such as the Philippines, Taiwan, Singapore and Australia, and Korea continues to be a strong destination for European pork. While this surge was prompted by the closure of the Russian market, this is not a short-term phenomenon. There has been a significant transition in global pork trade patterns and we expect it to have a lasting impact.”
Russia was traditionally the largest destination for EU pork, but suspended imports in January 2014 due to African swine fever. Russia also included pork from the EU, U.S. and Canada in the trade embargo imposed last year as a result of the ongoing conflict in Ukraine. Russia recently announced that it would extend this embargo through June 2016, meaning that large supplies of European pork will continue to flow to other markets. The weakened euro – currently down about 22% year-over-year versus the U.S. dollar – has also bolstered the competitiveness of EU pork.