Beef exports trend lower

Source: USMEF | Nov. 5, 2020

September beef exports were down 6% from a year ago to 103,277 mt, valued at $600.9 million (down 9%), according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Beef exports were fairly steady with last year in major Asian markets but trended lower overall. Through September, exports trailed last year’s pace by 8% in volume (911,936 mt) and 9% in value ($5.55 billion).

Beef export value averaged $274.31 per head of fed slaughter in September, down 14% from a year ago, while the January-September average fell 5% to $295.21. Exports accounted for 12.8% of September beef production and 10.5% for muscle cuts only, down from 14.6% and 11.9%, respectively, in September 2019. January-September exports accounted for 13.2% of total production and 11% for muscle cuts, down from 14.3% and 11.6%, respectively.

September exports of U.S. pork increased 10% year-over-year, keeping 2020 exports on a record pace. Exports reached 222,475 metric tons (mt) in September, with value increasing 6% to $563.2 million. Through the first three quarters of the year, exports were 16% ahead of last year’s record pace in both volume (2.22 million mt) and value ($5.69 billion). The increases were even stronger for pork muscle cuts, jumping 22% to 1.87 million mt valued at $4.93 billion (up 19%).

Pork export value averaged $51.07 per head slaughtered in September, up 2% from a year ago, while the January-September average increased 14% to $58.63. Exports accounted for 26.5% of total pork production in September and 23.9% for muscle cuts only, up from 25.1% and 21.7%, respectively. Through September, exports accounted for 29.6% of total production and 26.9% for muscle cuts, up from the 2019 ratios of 26.3% and 22.8%.

Beef demand still volatile, but exports poised for strong finish to 2020

COVID-19 related obstacles continue to negatively impact demand for U.S. beef in several key markets, especially Mexico, Central America and the Caribbean. Some Asian markets also recently re-imposed social distancing measures, but retail and takeout demand in these markets tends to offset more of the losses in sit-down dining.

“Although restaurant traffic and foodservice activity are not back to normal in most Asian markets, USMEF is very encouraged by the recovery in Asia and this was especially evident in the strong August and September exports of U.S. beef to South Korea, Taiwan and China,” Halstrom said. “As we close out the year, U.S. beef has a great opportunity to capture greater market share in Asia due to tightening supplies from Australia. While it will require more time, we also expect U.S. beef to regain momentum in regions where beef demand depends more heavily on travel and tourism, and where e-commerce channels are not as well-developed.”

Following a record performance in August, beef exports to Korea remained strong in September at 21,450 mt, up slightly from a year ago, though value slipped 7% to $140.7 million. Through September, exports to Korea trailed last year’s record pace by 3% in volume (189,712 mt) and 6% in value ($1.32 billion). Korea’s imports of chilled U.S. beef were on a record pace through September, increasing 15% from a year ago to 47,370 mt, with market share climbing to 64%.

Also coming off a record-large month, September exports to Taiwan were up 13% from a year ago to 5,756 mt, valued at $49.4 million (up 14%). These results pushed January-September exports 1% ahead of last year’s record pace at 48,285 mt, valued at $413.6 million (down 3%).

September beef exports to leading market Japan were up slightly from a year ago at 24,160 mt, though value fell 4% to $142.5 million. Through September, exports to Japan were 3% below last year in both volume (233,730 mt) and value ($1.47 billion). However, U.S. share of Japan’s imports has increased from 40.6% to 43.7% as Japan is importing less from Australia and Canada while imports of certain U.S. products, including short plate and tongues, exceed last year.

Other January-September highlights for U.S. beef include:

• Beef exports to China set another record in September at 4,730 mt valued at $32.3 million, more than tripling last year’s totals. January-September exports to China were 17,878 mt (up 160% from a year ago) valued at $129.6 million (up 136%). This growth helped push exports to the China/Hong Kong region 11% above last year at 76,493 mt, with value up 5% at $604.8 million. Australia’s grain-fed exports to China totaled 51,745 mt through September, down 1% from last year, while grass-fed volume fell by 30% to 104,100 mt on limited Australian production and strong competition from South America. USMEF projects strong demand for grain-fed U.S. beef in China even as prices have softened for grass-fed beef.
• Demand for U.S. beef continues to strengthen in Canada, where exports were 12% ahead of last year in volume (83,017 mt) and 14% higher in value ($564.9 million). Canada has been a bright spot for U.S. beef variety meat, with exports climbing 21% to 6,803 mt valued at $14.8 million (up 40%).
• Sub-Saharan Africa has also emerged as a strong destination for U.S. beef variety meat, with exports increasing 62% from a year ago in volume (21,476 mt) and 58% in value ($16.1 million), led by growth in South Africa, Cote d’Ivoire, Gabon and Angola.
• Strong demand for U.S. beef livers helped push September exports to Peru to 1,182 mt, the highest since 2014. January-September exports to Peru were up 23% from a year ago at 7,417 mt. Value was down 20% to $15.5 million, reflecting a larger percentage of variety meat in the export mix.

China still leading pork shipments, but other key markets strengthening

Pork exports to the China/Hong Kong region remained strong in September, outpacing last year by 23% in volume (62,791 mt) and 14% in value ($132 million) and pushing exports through the third quarter to 800,747 mt (up 96% from a year ago) valued at $1.83 billion (up 120%). However, September exports to China/Hong Kong accounted for 28% of total U.S. export volume and 23% of total value, compared to 37% and 33%, respectively, from January through August. U.S. pork continues to face a 25% tariff disadvantage in China, due to retaliatory duties related to U.S. section 232 tariffs on steel and aluminum.

“Exporting countries are watching the hog production recovery in China very closely, because we know its demand for imported pork is moderating,” said USMEF President and CEO Dan Halstrom. “While USMEF is pleased to see U.S. pork exports to China/Hong Kong maintaining a strong pace, it is vitally important that our export destinations remain diversified. The U.S. industry continues to pursue this goal aggressively, both in the Asia Pacific region and the Western Hemisphere.”

Reflecting a continued tight labor situation, September exports of bone-in ham and shoulder cuts were up 46% from a year ago at 56,792 mt, led by Mexico (39,600 mt, +13%) and China (11,100 mt, up from minimal volumes a year ago), plus growth to Canada, Colombia, Philippines and Vietnam. Conversely, smaller pork variety meat exports are also due in part to limited U.S. labor availability.

September exports to Japan, traditionally the leading value market for U.S. pork, increased 11% from a year ago in both volume (30,746 mt) and value ($126.7 million). Despite slumping in May and June due mainly to interruptions in production, exports through September were up 2% from a year ago to 284,108 mt, valued at $1.19 billion (up 4%). Japan’s imports of U.S. ground seasoned pork reached $243 million through September, up 46% from last year, capitalizing on tariff reductions included in the U.S.-Japan Trade Agreement.

For the second consecutive month Mexico was the leading volume destination for U.S. pork muscle cuts, with September exports reaching 47,898 mt (up 2% from a year ago). But when adding variety meat, September exports were down 2% at 55,340 mt, valued at $88.8 million (down 9%). January-September exports declined 7% in volume (490,893 mt) and 14% in value ($790.6 million). Despite the lower volumes, U.S. share of Mexico’s pork imports has rebounded strongly in 2020 to 89%, up from 83% in the same period last year.

Other January-September highlights for U.S. pork include:

• With pork production in the Philippines and Vietnam impacted by African swine fever, exports to the ASEAN region continue to gain momentum, climbing 39% above last year in volume (58,077 mt) and 45% higher in value ($137.5 million). Exports to Vietnam more than tripled last year’s volume (20,723 mt, up 203%) and quadrupled in value ($44.7 million, up 302%). The Philippines remains the region’s largest destination for U.S. pork, with exports up 8% from a year ago in volume (33,032 mt) and 13% higher in value ($79.7 million).
• Canada’s demand for U.S. pork is also trending higher, with export setting a record in September at 23,153 mt (up 20% from a year ago) valued at $88.2 million (up 19%). Through September, exports were 6% above last year at 169,751 mt, valued at $626.7 million (up 5%).
• Exports to Taiwan were sharply higher in September at 2,772 mt (up 359% from a year ago), valued at $7 million (up 233%). This pushed the January-September totals to 15,937 mt (up 13%) valued at $41.1 million (up 21%). However, U.S. pork may face headwinds in the market due to pushback following the Taiwanese government’s announcement that it will ease restrictions on U.S. pork produced with ractopamine, coupled with a plan to implement extensive country of origin labeling requirements. Taiwan’s amended regulations are set to take effect Jan. 1.
• Pork exports to Chile rebounded strongly in September, doubling the year-ago volume at 4,059 mt, valued at $9.6 million (up 57%). January-September exports pulled closer to last year’s pace but remained 4% lower in volume (32,474 mt) and 9% lower in value ($88.8 million).
• January-September exports to the Caribbean were up 5% year-over-year in volume to 42,009 mt, with value steady at $98.4 million. Strong retail demand in Trinidad and Tobago (which is less dependent on tourism than other islands in the region) and the popularity of processed pork using U.S. raw material in the Dominican Republic continue to support export volumes. Exports to the Bahamas also rebounded in September as resorts planned to reopen for the high tourist season.

September lamb exports higher year-over-year

September exports of U.S. lamb cooled from July and August but remained higher than a year ago in both volume (1,971 mt, up 37%) and value ($2 million, up 13%). Driven by strong demand from Mexico, January-September exports increased 36% to 16,399 mt, though value was down 1% to $19 million. In addition to Mexico, lamb muscle cut exports increased from a year ago to Bermuda, Hong Kong, Japan and Kuwait.

Complete January-September export results for U.S. pork, beef and lamb are available from USMEF’s statistics Web page.

NOTES:

• Export statistics refer to both muscle cuts and variety meat, unless otherwise noted.
• One metric ton (mt) = 2,204.622 pounds.
• U.S. pork currently faces retaliatory duties in China. China’s duty rate on frozen pork muscle cuts and variety meat increased from 12% to 37% in April 2018, from 37% to 62% in July 2018 and from 62% to 72% on Sept. 1, 2019. The rate on pork cuts was reduced to 68% on Jan. 1, 2020, through a reduction in the most-favored-nation (MFN) rate and to 63% on Feb. 14, 2020, through a reduction in the Section 301 retaliatory duty. The duty on pork variety meat was reduced to 67% on Feb. 14.
• U.S. beef faces retaliatory duties in China. China’s duty rate on beef muscle cuts and variety meats increased from 12% to 37% in July 2018 and from 37% to 47% on Sept. 1, 2019. It was reduced to 42% on Feb. 14, 2020.
• In February 2020, China announced a duty exclusion process that allows importers to apply for relief from duties imposed in response to U.S. Section 301 duties. When an application is successful, the rate for U.S. beef can decline to the MFN rate of 12% and the rate for U.S. pork can decline to 33% for muscle cuts and 37% for pork offal (the 25% Section 232 retaliatory duty on U.S. pork remains). Some importers reported receiving duty relief beginning on March 2, 2020.
• Mexico’s duty rate on pork muscle cuts increased from zero to 10% in June 2018 and jumped to 20% the following month. Beginning in June 2018, Mexico also imposed a 15% duty on sausages and a 20% duty on some prepared hams. Mexico removed all duties in late May 2019.