The value of beef and pork remains strong in the United States, with a lot of that credit given to exports of both products.
Last year, the industry was ecstatic about the volume and value shipped to Asia and around the world. First quarter results for this year are better for beef and almost as good for pork.
According to data released by the U.S. Department of Agriculture (USDA) and compiled by the U.S. Meat Export Federation (USMEF), beef exports set a new monthly value record in March and pork export value reached the second-highest level on record. The U.S. is exporting a strong share of beef and pork product at higher prices — a clear sign of solid international demand.
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The March beef export value was $693.1 million, up 18-percent year-over-year and topping the previous high set in October 2014. Export volume was 111,994 metric tons (mt), up six-percent from a year ago. Exports were nine-percent ahead of last year’s pace in volume (318,073 mt) and jumped 19-percent in value ($1.92 billion) during the first quarter.
Exports accounted for 13.6-percent of total beef production in March, up nearly a full percentage point from a year ago. The percentage of muscle cuts only exported was eleven-point-one- percent – up from nine-point-nine percent last year. January through March exports accounted for thirteen-point-two-percent of total production and ten-point-seven- percent for muscle cuts, up from twelve-point-four-percent and nine-point-eight-percent, respectively.
Beef export value averaged $332.89 per head of fed slaughter in March, up 23-percent from a year ago. Per-head value averaged $315.67 in the first quarter, up 18 percent.
On the pork side: March export volume was steady with last year at 227,363 mt, while value increased four-percent to $610.4 million – trailing only the November 2017 record of $615.8 million. January-March, volume increased one-percent year-over-year to 636,297 mt, while value was up eight-percent to $1.7 billion.
Exports accounted for twenty-seven-and-a-half-percent of total pork production in March, down from 28-percent a year ago. While the percentage of muscle cuts exported increased slightly to twenty-three-and-a-half-percent. First-quarter exports followed a similar pattern, accounting for twenty-six-point-six-percent of total production (down from 27-percent a year ago) and 23-percent for muscle cuts only (up from twenty-two-point-six-percent).
March pork export value averaged $56.91 per head slaughtered, up four-percent from a year ago, while the January-March average increased five-percent to $54.81.
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 six-percent to $177.5 million. For the first quarter, exports to Japan were down three-percent in volume (72,440 mt), but still increased eight-percent in value ($459.5 million). This included a six-percent increase in chilled beef to 35,290 mt, valued at $275 million (up 18-percent).
March was the final month in which the higher safeguard tariff rate (50-percent versus the normal thirty-eight-and-a-half-percent) 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,” explained USMEF President and CEO Dan 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 (EPA), Australian beef entering Japan is subject to tariff rates of twenty-six-point-nine-percent for frozen cuts and twenty-nine-point-three-percent for chilled, while the rate for beef from most other suppliers is thirty-eight-and-a-half-percent (Mexico’s EPA rate is thirty-point-eight-percent). 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 nineteen-and-a-half-percent for frozen and twenty-three-and-a-half-percent for chilled, but will be phased down to nine-percent once the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) 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 (KORUS). 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-percent ahead of last year’s pace at 51,909 mt, while value increased 37-percent to $366.3 million. Chilled beef exports to Korea accelerated at an even faster rate, increasing 34-percent from a year ago in volume (11,408 mt) and 44-percent 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-percent 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 four-percent in volume (25,921 mt), they still achieved a 17-percent increase in value to $60.5 million.
– In Taiwan, exports increased 34-percent year-over-year in volume (13,067 mt) and 48-percent in value ($126.7 million). This included a 61-percent increase in chilled beef exports to 5,860 mt, valued at $74.4 million, up 72-percent. The United States holds 74-percent of Taiwan’s chilled beef market, the highest of any Asian destination.
– Exports to China/Hong Kong climbed 34-percent in volume (35,060 mt) and 61-percent 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-percent year-over-year) valued at $61 million (up 46-percent). Exports also increased to the Philippines and Vietnam.
– Strong performances in Chile and Colombia pushed beef exports to South America 42-percent higher in volume (7,006 mt) and 46-percent 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-percent in volume (1,424 mt) and 45-percent in value ($8.4 million). Exports to the Central American region were up 15-percent in volume (3,145 mt) and 17-percent in value ($17.8 million).
– Beef muscle cuts continue to make inroads in Africa, where first-quarter exports were up 27-percent in volume (4,340 mt) and 88-percent 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-percent of export volume and 60 percent of export value.
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 four-percent) and value ($120.3 million, down five-percent). For the first quarter, exports were down just one-percent 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-percent in volume (33,969 mt) and 11-percent in value ($138.6 million). January through March, exports to Japan were steady in volume at 101,435 mt and increased two-percent in value to $419.7 million. This included a five-percent 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,” Halstrom said. “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 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-percent from a year ago in volume (69,518 mt) and 47-percent 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-percent from a year ago to 111,681 mt. However, first-quarter export value still increased one-percent to $260.7 million. China’s additional 25-percent 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-percent higher than a year ago in volume (29,126 mt) and 24-percent 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-percent from a year ago in volume (18,605 mt) and 22-percent 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-percent in volume (9,578 mt) and 25-percent in value ($21.5 million). This pushed first-quarter exports to the Caribbean up 13-percent (13,439 mt) and 16-percent ($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-percent higher in volume (10,634 mt) and 32-percent 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 percent year-over-year in volume (3,603 mt) and 45 percent in value ($9.1 million).
Lamb exports lower in March, still up year-over-year
March exports of U.S. lamb were lower than a year ago in volume (845 mt, down nine-percent) and value ($2 million, down 10-percent). But for the first quarter, exports still climbed 25-percent in volume (2,484 mt) and eight-percent in value ($5.4 million). Growth was driven by larger muscle cut shipments to the Bahamas, the Turks and Caicos Islands, Canada, the Philippines and Taiwan, and stronger demand for variety meat in Mexico.
Complete January-March export results for U.S. beef, pork and lamb are available from USMEF’s statistics web page.
*** Thank you to the U.S. Meat Export Federation and Ron Hays from the Radio Oklahoma Ag Network for content of this report.