Tremendous First Half for U.S. Beef Exports; Pork Exports Still ahead of 2017 Pace

Strong June results capped a huge first half of 2018 for U.S. beef exports, according to data released by USDA and compiled by USMEF. June pork exports were lower than a year ago for the second consecutive month, but first-half volume and value remained ahead of last year’s pace.

Beef muscle cut exports set a new volume record in June of 90,745 metric tons (mt), up 15 percent from a year ago. When adding variety meat, total beef export volume was 115,718 mt, up 6 percent, valued at $718.4 million – up 19 percent year-over-year and only slightly below the record total ($722.1 million) reached in May. First-half exports set a record pace in both volume and value as international customers bought a larger share of U.S. beef production at higher prices, indicating strong demand. Export volume was up 9 percent from a year ago to 662,875 mt while export value was just over $4 billion, up 21 percent. In previous years, export value never topped the $4 billion mark before August.

“It’s remarkable to think that as recently as 2010, beef exports for the entire year totaled $4 billion, and now that milestone has been reached in just six months,” noted Dan Halstrom, USMEF president and CEO. “This should be a source of great pride for the beef industry, which has remained committed to expanding exports even when facing numerous obstacles. And with global demand hitting on all cylinders, there is plenty of room for further growth.”

June exports accounted for 13.4 percent of total beef production, up from 12.8 percent a year ago. For muscle cuts only, the percentage exported was 11.3 percent, up from just under 10 percent last year. First-half exports accounted for 13.5 percent of total beef production and 11 percent for muscle cuts – up from 12.8 percent and 10 percent, respectively, last year. Beef export value averaged $313.56 per head of fed slaughter in June, up 19 percent from a year ago. The first-half average was $316.94 per head, up 18 percent.

After setting a new record in April, pork export volume has trended lower the past two months, mainly due to lower exports to the China/Hong Kong region. June exports totaled 191,303 mt, down 4.5 percent from a year ago, despite a slight increase in muscle cut exports (to 153,083 mt). June export value was $510.4 million, down 3 percent. For the first half of 2018, pork export volume was still 2 percent ahead of last year’s record pace at 1.27 million mt, while value increased 5 percent to $3.36 billion. For pork muscle cuts only, first-half exports were up 6 percent year-over-year in both volume (1.02 million mt) and value ($2.78 billion).

“Pork exports – and especially variety meats – face a very challenging environment in China/Hong Kong due not only to retaliatory duties but also because of increasing domestic production in China,” Halstrom explained. “On the positive side, exports are achieving solid growth in most other markets and reached new heights in destinations such as Korea and Latin America. So there is no time to dwell on factors the U.S. industry cannot control – we must continue to find new opportunities in both established and emerging markets.”

On April 2, the import duty on U.S. pork and pork variety meats entering China increased from 12 percent to 37 percent. On July 6, the rate increased to 62 percent. Mexico imposed a 10 percent retaliatory duty on U.S. pork muscle cuts (variety meats are excluded) on June 5 and increased the rate to 20 percent on July 5. Pork sausages and prepared hams entering Mexico are subject to duties of 15 percent and 20 percent, respectively, which took effect June 5. First-half export results reflect the first round of duties imposed by China and Mexico, but not the higher rates that took effect in July.

June pork exports accounted for 26.4 percent of total production, down from 27.1 percent a year ago, but the percentage of muscle cuts exported increased from 22.2 percent to 22.8 percent. First-half exports equaled 27.3 percent of total pork production (down from 27.8 percent a year ago) and 23.6 percent for muscle cuts (up from 23.1 percent). Pork export value averaged $53.13 per head slaughtered in June, down slightly from a year ago, while the first-half per-head average increased 2 percent to $55.18.

Asian markets lead the way, but U.S. beef accelerating in nearly every region

Beef exports to leading market Japan continued to climb in June, totaling 31,147 mt (up 13 percent from a year ago) valued at $193.1 million (up 11 percent). First-half exports to Japan were up 6 percent from a year ago in volume at 159,354 mt while value increased 12 percent to $1.02 billion. This included a 4 percent increase in chilled beef to 73,968 mt, valued at $590.1 million (up 15 percent).

June exports to South Korea were up 46 percent from a year ago in volume (21,408 mt) and set another new value record at $154.8 million (up 68 percent). First-half exports to Korea climbed 36 percent to 113,283 mt, valued at $802.1 million – up 52 percent from last year’s record pace. Chilled beef exports to Korea totaled 25,400 mt (up 35 percent) valued at $244.8 million (up 47 percent).

For January through June, other highlights for U.S. beef exports include:

• Despite trending lower in June, first-half exports to Mexico were up 2 percent from a year ago in volume (117,524 mt) and up 10 percent in value ($506.7 million). Mexico is the leading destination for U.S. beef variety meat exports, which increased 8 percent from a year ago in value ($114.8 million) despite a 6 percent decline in volume (50,209 mt). • Exports to China/Hong Kong increased 15 percent in volume (65,345 mt) and 43 percent in value ($510.8 million). First-half exports to China, which reopened to U.S. beef in June of last year, were 3,655 mt valued at $33 million. Although China’s duty rate increase on U.S. beef (from 12 percent to 37 percent) didn’t take effect until July 6, June exports slowed in part because of rising uncertainty as China’s proposed retaliatory tariff list that included U.S. beef was published in April. • Beef exports to Taiwan continue to soar, as first-half volume increased 32 percent from a year ago to 26,865 mt and value was up 39 percent to $249.7 million. Chilled exports to Taiwan were up 34 percent in volume (10,974 mt) and 46 percent in value ($136.2 million), as the United States captured 74 percent of Taiwan’s chilled beef market – the highest market share of any Asian destination. • Strong growth in Colombia helped push first-half exports to South America higher than a year ago – up 2 percent in volume (14,030 mt) and climbing 20 percent in value ($63.9 million). Export value to Chile and Peru also increased, despite volumes dipping below last year. Although still a small market, exports to Ecuador (600 mt) were the largest since 2013. • Beef exports to the ASEAN region slowed in June but still posted year-over-year gains in the first half – up 6 percent in volume (21,802 mt) and 24 percent in value ($122.8 million). This region – especially Indonesia and the Philippines – is an important destination for beef variety meat exports, which climbed 27 percent in value ($13.1 million) despite a slight decline in volume (6,212 mt). • Fueled by sharply higher exports to Guatemala, Costa Rica and Panama, first-half volume to Central America increased 27 percent from a year ago to 6,942 mt, valued at $38.8 million (up 26 percent).

 

Tariffs, uncertainty challenge U.S. pork in mainstay markets, while Korea, Latin America and ASEAN drive first-half export growth

As noted above, a 10 percent duty on most U.S. pork entering Mexico took effect June 5, contributing to a slowdown in June volume (59,967 mt, down 7 percent last June’s record-large total). Export value fell 16 percent to $105.1 million. First half export volume to Mexico was still 4 percent ahead of last year’s record pace at 413,231 mt, but value slipped 1 percent below a year ago to $726.1 million.

“USMEF is working closely with Mexico’s major processors and other key customers to reemphasize the advantages of fresh U.S. pork, as we work to assist U.S. suppliers in solidifying as much business as possible in this critical market,” Halstrom said. “USMEF feels strongly that exports to Mexico could set another new volume record in 2018, though export value will likely be lower due to the retaliatory duties. We remain hopeful that duty-free access to Mexico will be restored soon, as competitors are now targeting a market that U.S. pork has dominated for many years, and the duties are contributing to lower prices for U.S. producers and adding costs for customers in Mexico.”

Pork exports to the China/Hong Kong region were already projected to be lower in 2018 due to China’s higher hog production, but the additional 25 percent tariff imposed on April 2 (imported pork still enters Hong Kong duty-free) intensified this trend. First-half exports to China/Hong Kong were 21 percent below last year’s pace in volume (216,008 mt) and down 9 percent in value to $507.2 million. June exports were hit especially hard, declining 37 percent from a year ago in volume (28,569 mt) and 19 percent in value ($70.7 million).

January-June highlights for U.S. pork exports include:

• June exports to leading value market Japan were 5 percent higher than a year ago in volume (31,773) and increased 6 percent in value ($131.9 million). In the first half, export volume was down 1 percent to 199,067 mt but value still edged 1 percent higher to $821.4 million. This included a 2 percent decrease in chilled pork to 104,365 mt, valued at $504.2 million (up slightly year-over-year). • Exports to South Korea posted an outstanding first half, climbing 42 percent in volume (134,190 mt) and 49 percent in value ($386.5 million). Korea’s per capita pork consumption continues to expand rapidly, and U.S. pork is capturing a larger share of Korea’s imports while Korea’s domestic production is modestly increasing. • Fueled by strong growth in Colombia and Peru, first-half exports to South America jumped 29 percent from a year ago in volume (62,314 mt) and 26 percent in value ($153.5 million). Plant and product registration requirements for exporting pork to Argentina were finalized in late June, so the Argentine market could add further momentum for U.S. pork in the second half of the year. • Following a record performance in 2017, pork exports to Central America surged 20 percent higher in both volume (40,210 mt) and value ($95.5 million). While Honduras and Guatemala are this region’s mainstay markets, exports to all seven Central American nations achieved double-digit growth in the first half of 2018. • Exports to the Dominican Republic, which were also record-large in 2017, increased 16 percent in both volume (22,267 mt) and value ($49.5 million) in the first half of the year. For the Caribbean region, exports were up 11 percent in both volume (29,960 mt) and value ($71 million). • Led by the Philippines and Vietnam, first-half exports to the ASEAN region increased 16 percent in volume (26,952 mt) and 21 percent in value ($71.2 million). The Philippines is an especially important destination for pork variety meat exports when shipments to China are declining, and first-half variety meat volume to the Philippines climbed 64 percent from a year ago to 8,680 mt, while value jumped 70 percent to ($15.3 million). • With the tariff situation in Mexico, Oceania is an increasingly important destination for U.S. hams and other cuts destined for further processing. First-half exports to Australia were 7 percent higher than a year ago in volume (39,031 mt) and increased 9 percent in value ($113.7 million). Exports to New Zealand increased 15 percent in volume (3,903 mt) and 17 percent in value ($12.5 million).

Lamb exports continue to climb

June exports of U.S. lamb were the largest of 2018 in both volume (1,016 mt, up 58 percent from a year ago) and value ($2.2 million, up 26 percent), pushing first-half exports 46 percent ahead of last year’s pace in volume (5,471 mt) and 17 percent higher in value ($11.3 million). Stronger variety meat demand in Mexico accounted for much of this growth, but muscle cut exports trended higher to the Caribbean, the United Arab Emirates, Canada, Singapore, the Philippines and Taiwan. Exports should receive an additional boost in the second half of the year from Japan, which reopened to U.S. lamb on July 11.

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

If you have questions, please contact Joe Schuele at jschuele@usmef.org or call 303-547-0030.

NOTES:

• Export statistics refer to both muscle cuts and variety meat, unless otherwise noted.
• One metric ton (mt) = 2,204.622 pounds.

Posted 8/6/2018

Please note: June pork export value was first reported as $55.13 per head, and has been corrected above to $53.13.