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Meat exports continue to perform well in 2013

Meat exports continue to perform well in 2013

Increased pork and poultry production could pressure beef demand next year, but stellar exports have kept product moving despite record-high prices.

BEEF exports remained on a record-setting pace in October, while pork exports put up one of their strongest performances of the year, according to statistics released by the U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation (USMEF).

Top beef export markets Japan and Mexico both increased the volume of their U.S. beef purchases more than 40% for the month, while sales to the booming Hong Kong market jumped 148%. Overall, October U.S. beef exports reached 107,471 metric tons valued at $564.5 million, increases of 6% and nearly 14%, respectively.

Pork exports in October were the largest of the year on a value basis, at $539.9 million, and the second largest in volume, at 186,637 mt, but still declined 11% and 14%, respectively, from last October's all-time single-month highs for both volume and value, USMEF said. Despite strong performances in several key Asian markets, market access issues in Russia and China have kept the pace of pork sales behind the record-high levels of 2012.

"The ebbs and flows of export markets require us to make continual adjustments," said Philip Seng, USMEF president and chief executive officer. "For example, Japan remains the U.S.'s top value market for pork exports, but relentless competition from other international suppliers is making it tougher for us to maintain our market share."

Seng also noted that while Congress debated budget cuts that could affect spending on programs like the Market Access Program and Foreign Market Development program that support U.S. agricultural exports, the European Commission has proposed to more than triple its spending to support agricultural and agri-food sector products in the European Union.

"There is no question that exports create jobs and support a positive balance of trade," Seng said. "The European Commission sees that link and is looking to put significantly more resources into their export initiative, so we can expect to face even heavier competition in the top value markets going forward."

According to the USMEF analysis, the value of exports expressed as a value per head of fed slaughter cattle averaged $261.06 in October, up $29 from the previous year. Exports represented 11% of muscle cuts and 13.5% of total beef exports for the month, both up roughly one percentage point from last year.

Pork export value per head averaged $51.79, down 7% from last year. Exports accounted for nearly 20% of pork muscle cuts and nearly 24% of total pork production, both down roughly three percentage points from last year.

According to "Daily Livestock Report" economists Len Steiner and Steve Meyer, the latest beef export numbers are very positive, although exports remain a "wild card" for the industry next year as supplies continue to contract. At the same time, the ongoing dispute with Canada over country-of-origin labeling is likely to disrupt Canadian purchases of U.S. beef.

At the moment, Steiner and Meyer said beef demand is doing "relatively well" despite tight supplies of cattle and near-record retail beef prices. USDA said last week it estimated 2014 beef production at 24.288 billion lb., down 5.7% compared with 2013 levels.

USDA increased its overall domestic pork supply estimate by 2.4% from last year, indicating an assumption that porcine epidemic diarrhea virus will have a relatively limited impact on the supply of hogs available for slaughter next year. The potentially devastating disease remains something of an enigma for the industry as anecdotal reports about the disease's spread and associated piglet mortality seem to conflict with USDA data.

Oklahoma State University livestock marketing specialist Derrell Peel noted last week that the sharp drop in beef supplies could spell trouble ahead for beef demand as tight cattle numbers will likely drive wholesale and retail prices even higher.

"Both pork and poultry production are expected to increase in 2014, providing more competition with increased availability and moderate prices," he wrote in a bulletin. Exports of both meats, however, could take a significant percentage of increased production out of the domestic market rather than filling up retailers' meat cases with cheaper alternatives to high-priced beef.

The good news, Peel said, is that continued macroeconomic growth in the U.S. and an improvement in consumer incomes will support continued demand improvement in the beef complex.

"Though progress seems slow, the fact is that beef demand has improved considerably from the recessionary lows of 2010," he concluded. "Beef demand will continue to adjust in 2014."

Volume:85 Issue:51

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