Source: U.S. Meat Export Federation
Strong March results capped an excellent first quarter for U.S. red meat exports, according to data released by USDA and compiled by the U.S. Meat Export Federation, as pork export value reached the second-highest level on record and beef exports set a new monthly value record in March. The United States is exporting a strong share of its pork and beef production at higher prices — a clear sign of solid international demand.
March pork export volume was steady with last year at 227,363 metric tons, while value increased 4% to $610.4 million — trailing only the November 2017 record of $615.8 million. For the January-to-March quarter, volume increased 1% year-over-year to 636,297 mt, while value was up 8% to $1.7 billion.
Exports accounted for 27.5% of total pork production in March, down from 28% a year ago, while the percentage of muscle cuts exported increased slightly to 23.5%. First-quarter exports followed a similar pattern, accounting for 26.6% of total production (down from 27% a year ago) and 23% for muscle cuts only (up from 22.6%).
March pork export value averaged $56.91 per head slaughtered, up 4% from a year ago, while the January-to-March average increased 5% to $54.81.
March beef export value was $693.1 million, up 18% year-over-year and topping the previous high set in October 2014. Export volume was 111,994 mt, up 6% from a year ago. For the first quarter of 2018, exports were 9% ahead of last year’s pace in volume (318,073 mt) and jumped 19% in value ($1.92 billion).
Exports accounted for 13.6% of total beef production in March, up nearly a full percentage point from a year ago. For muscle cuts only, the percentage exported was 11.1% — up from 9.9% last year. For January through March, exports accounted for 13.2% of total production and 10.7% for muscle cuts, up from 12.4% and 9.8%, respectively.
Beef export value averaged $332.89 per head of fed slaughter in March, up 23% from a year ago. For the first quarter, per-head value averaged $315.67, up 18%.
First-quarter pork exports fairly steady to Mexico and Japan, up sharply to Korea and Latin America
March pork exports to leading volume destination Mexico were below last year’s level in volume (66,136 mt, down 4%) and value ($120.3 million, down 5%). For the first quarter, exports were down just 1% from last year’s record pace in volume (203,656 mt) and were steady in value at $371.3 million.
Exports to Japan, the leading value market for U.S. pork, followed similar trends as March exports slowed 10% in volume (33,969 mt) and 11% in value ($138.6 million). But for January through March, exports to Japan were steady in volume at 101,435 mt and increased 2% in value to $419.7 million. This included a 5% decline in chilled pork to 53,688 mt. Chilled pork value was down slightly at $258.6 million.
“While exports to these two mainstay markets moderated in March, they still posted a strong first-quarter performance,” says USMEF President and CEO Dan Halstrom. “Mexico continues to be a critically important destination for U.S. hams, while Japanese demand is very strong for U.S. loins. In both cases, USMEF works closely with processors, retailers and other key buyers to develop new products and new menu ideas that will further expand consumers’ interest in these items.”
Other first-quarter highlights for U.S. pork include:
• South Korea’s demand for U.S. pork is booming, as exports climbed 36% from a year ago in volume (69,518 mt) and 47% in value ($202 million). USMEF is helping to position U.S. pork in all sectors, but Korea’s rising pork consumption is especially evident in sales of home meal replacement items and convenience foods.
• With China’s rising domestic hog production and falling prices cooling demand for imported pork, export volume to China/Hong Kong slowed 15% from a year ago to 111,681 mt. However, first-quarter export value still increased 1% to $260.7 million. China’s additional 25% tariff on imports of U.S. pork, imposed in retaliation for U.S. tariffs on steel and aluminum, took effect April 2 and therefore any trade impact is not reflected in the first-quarter results.
• Strong growth in Colombia pushed exports to South America 22% higher than a year ago in volume (29,126 mt) and 24% higher in value ($70.8 million). Exports to Chile dipped slightly in volume but were still higher in value year-over-year. Argentina officially opened to U.S. pork in April, but shipments have not yet begun as exporters work through regulatory requirements.
• Volumes increased to traditionally reliable markets Honduras and Guatemala, as exports to Central America were up 16% from a year ago in volume (18,605 mt) and 22% in value ($45 million). The region got an even stronger boost from smaller markets, as exports jumped sharply to Panama, El Salvador and Nicaragua.
• Coming off a record year, demand for U.S. pork in the Dominican Republic continues to gain momentum, with exports increasing 23% in volume (9,578 mt) and 25% in value ($21.5 million). This pushed first-quarter exports to the Caribbean up 13% (13,439 mt) and 16% ($32.5 million), respectively.
• Steady growth in the Philippines and sharply higher results in Vietnam and Singapore moved pork exports to the ASEAN region 21% higher in volume (10,634 mt) and 32% higher in value ($29.5 million).
• Exports to Taiwan, which rebounded last year following a down year in 2016, continued to regain momentum in the first quarter. Exports increased 40% year-over-year in volume (3,603 mt) and 45% in value ($9.1 million).
Asian and Latin American markets drive big jump in beef export value
March beef exports to leading market Japan were steady with last year’s pace at 28,158 mt, while value increased 6% to $177.5 million. For the first quarter, exports to Japan were down 3% in volume (72,440 mt) but still increased 8% in value ($459.5 million). This included a 6% increase in chilled beef to 35,290 mt, valued at $275 million (up 18%).
March was the final month in which the higher safeguard tariff rate (50% versus the normal 38.5%) was applied to Japan’s imports of frozen U.S. beef. The higher rate took effect in August and expired on April 1 with the beginning of the new Japanese fiscal year.
“While beef exports to Japan held up well during those eight months, the higher tariff rate certainly weighed on exports of frozen cuts such as short plate,” explains Halstrom. “U.S. short plate is an essential ingredient for Japan’s gyudon restaurants, which are part of a highly competitive fast-casual dining sector. We are pleased to have the higher safeguard tariff rate behind us, though U.S. beef still faces a widening tariff rate gap in Japan compared to Australian beef, and U.S. beef remains subject to Japan’s quarterly safeguard mechanisms for chilled and frozen imports. USMEF continues to monitor this situation, and we are hopeful that the frozen beef safeguard will not be triggered this year.”
Through an economic partnership agreement, Australian beef entering Japan is subject to tariff rates of 26.9% for frozen cuts and 29.3% for chilled, while the rate for beef from most other suppliers is 38.5% (Mexico’s EPA rate is 30.8%). Imports from EPA suppliers also are not subject to Japan’s quarterly safeguards. Australia’s tariff rates decline annually until they reach a floor of 19.5% for frozen and 23.5% for chilled, but will be phased down to 9% once the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is implemented. Japan’s beef imports from Canada, New Zealand, Mexico and Chile will receive the same benefits under CPTPP.
Conversely, U.S. beef enjoys a tariff rate advantage in South Korea under the Korea-U.S. Free Trade Agreement. This has helped push U.S. beef’s presence in Korea to new heights as U.S. beef drives Korea’s overall consumption growth and especially its soaring appetite for steaks. Through the first quarter, export volume to Korea was 22% ahead of last year’s pace at 51,909 mt, while value increased 37% to $366.3 million. Chilled beef exports to Korea accelerated at an even faster rate, increasing 34% from a year ago in volume (11,408 mt) and 44% in value ($107.9 million).
Other first-quarter highlights for U.S. beef exports include:
• Exports to Mexico were steady with last year in volume at 57,039 mt and climbed 10% in value to $250.3 million. Mexico is the leading volume destination for U.S. beef variety meat, including tripe, hearts, kidneys and livers. While first-quarter variety meat exports to Mexico declined 4% in volume (25,921 mt), they still achieved a 17% increase in value to $60.5 million.
• In Taiwan, exports increased 34% year-over-year in volume (13,067 mt) and 48% in value ($126.7 million). This included a 61% increase in chilled beef exports to 5,860 mt, valued at $74.4 million (up 72%). The United States holds 74% of Taiwan’s chilled beef market, the highest of any Asian destination.
• Exports to China/Hong Kong climbed 34% in volume (35,060 mt) and 61% in value ($269.1 million). Weekly data show that shipments to China cooled in April following China’s proposed tariff increase on a number of U.S. products, including beef. Although these tariffs have not been implemented, the threat of a possible increase has added uncertainty to the Chinese market, which reopened to U.S. beef in June 2017.
• Fueled by rapid growth in Indonesia, beef exports to the ASEAN region reached 11,157 mt (up 55% year-over-year) valued at $61 million (up 46%). Exports also increased to the Philippines and Vietnam.
• Strong performances in Chile and Colombia pushed beef exports to South America 42% higher in volume (7,006 mt) and 46% higher in value ($34.3 million). Exports to Peru trended lower in volume but still increased in value.
• First-quarter demand was very strong in Guatemala, as beef exports increased 56% in volume (1,424 mt) and 45% in value ($8.4 million). Exports to the Central American region were up 15% in volume (3,145 mt) and 17% in value ($17.8 million).
• Beef muscle cuts continue to make inroads in Africa, where first-quarter exports were up 27% in volume (4,340 mt) and 88% in value ($6.7 million). While last year’s exports to Africa were almost entirely beef variety meat, muscle cuts now account for nearly 30% of export volume and 60% of export value.