USMEF Market Intelligence ...
USMEF Market Intelligence
Pork Export Forecast
Introduction
Following is the second in a four-part series from the U.S. Meat Export Federation (USMEF) that examines key statistics and trends from the U.S. Department of Agriculture’s beef and pork trade outlook forecast for 2008 through 2017, which was developed in November 2007 and released last week. The USDA 10-year outlook is a scenario based on what would be expected to happen under a continuation of current farm legislation and specific assumptions about external conditions. It is not a forecast. USDA data is based on carcass weight equivalent (CWE) and does not include variety meats.
Highlights
The United States is expected to lead the global pork export market over the coming decade, with our share of global exports increasing from an estimated 28 percent last year to 32 percent in 2017, according to 10-year projections released last week by the U.S. Department of Agriculture (USDA).
Despite a forecast for reduction in U.S. pork production in 2009, 2010 and 2011, USDA expects pork exports to continue to grow steadily, most likely fueled by strong global demand and the weak U.S. dollar. The USDA originally projected pork exports to increase 5 percent in 2008 and 3 percent per year thereafter throughout the balance of the 10-year outlook, however more recent forecasts call for a 16 percent increase in 2008 pork exports to 3.7 billion pounds. A number of factors influence the improved forecast, according to Erin Daley, USMEF manager of research and analysis, especially China’s domestic production and market access restrictions, recovery of exports to Mexico, and continued over-quota exports to Russia.
U.S. pork production also is expected to increase 5 percent in 2008, which is one of the factors that is expected to contribute to an anticipated 1 pound per capita increase in domestic pork consumption this year. It also is expected that increased production will have a moderating effect on prices, which will support increased consumption.
Beyond 2008, projections by the U.S. Meat Export Federation (USMEF) are slightly more optimistic, with forecast increases for 2009 through 2014 between 4 percent and 5 percent per year, according to Daley, who noted that the same factors that led to the improved 2008 forecast will drive export increases over the coming six years. In addition, the USMEF projection assumes approval of the South Korea/United States free trade agreement in 2009 and steady growth in exports to Japan – about 3 percent annually.
USDA forecasts 39 percent growth in U.S. pork exports over the next 10 years, or an additional 536,000 metric tons (1.18 billion pounds) for total 2017 exports of 1.9 million metric tons (nearly 4.2 billion pounds), up from 2007 estimated totals of 3 billion pounds.
Competitors
- Brazil – The USDA projects that Brazil’s 2008 pork exports will reach 775,000 metric tons (1.7 billion pounds), an 8 percent increase over 2007 exports of 715,000 metric tons (1.57 billion pounds). The USDA previously had projected Brazil’s pork exports for 2008 at 584,000 metric tons, but later revised that estimate.
Brazil exported 24 percent of its pork production in 2007, and production is projected to grow 4 percent in 2008 while domestic consumption increases only 2 percent. Already, annual domestic pork consumption in Brazil is less than one-third of that for beef and poultry (26.4 pounds of pork per person versus 81.4 pounds of beef and 83.6 pounds of poultry on a carcass weight basis).
Brazil’s pork exports are expected to slow to 1 percent growth in 2009 followed by a 3 percent fall in 2010, but then bounce back to average 2 percent to 5 percent annual growth through 2017.
Russia is Brazil’s largest pork export market, taking 45 percent of Brazilian exports in 2007. Brazil’s exports to Russia benefit from a lower duty (11.25 percent versus 15 percent for the United States) and generally fall under the 193,400 metric ton (426.3 million pounds) tariff rate quota (TRQ) versus the United States’ TRQ of 49,800 metric tons (nearly 110 million pounds).
The other top destinations for Brazilian pork exports in 2007 were Hong Kong with 18 percent and Ukraine with 10 percent. Brazil has negotiated direct access to China, but does not have any approved plants at this time. Brazil also exports smaller volumes of pork to Singapore, Argentina, Angola, Albania, Uruguay, Moldova and the United Arab Emirates. Brazil currently does not have access to most of the top markets for U.S. pork, including Japan, Mexico, Canada, Korea, Australia and the European Union. Brazil’s market access, depending primarily on its disease status, will impact future growth in the country’s pork exports. The strengthening of the Brazilian currency, the real, also could impact Brazil’s future pork exports, as November 2007 export values increased 16 percent compared to November 2006 while export volumes increased only 2.6 percent.
- Canada – USDA has reduced its export forecast for Canada, with new estimates showing relatively flat exports over the outlook period. The strong Canadian dollar has had a profound impact on livestock and meat trade flows in North America. U.S. imports of Canadian slaughter hogs increased 20 percent in 2007 and feeder imports increased 12 percent for a combined total of about 10 million head. This resulted in lower Canadian pork production and exports in 2007, and increased U.S. pork exports to Canada. USMEF’s Daley expects high feed and labor costs (partially due to the strong Canadian dollar) will continue to impact Canadian pork production and thus pork exports.
- European Union (EU) – EU exports also have been revised to show a 10 percent drop in exports during 2008 (totaling 1,147,000 metric tons – more than 2.5 billion pounds) and exports are not expected to exceed 2006 volumes until 2016. The export volumes for 2016 are reduced from last year’s estimate of 1,617,000 metric tons (3.56 billion pounds) to 1,281,000 metric tons (2.82 billion pounds).
According to Daley, the reduction in expected EU exports likely reflects expected contraction in EU pork production. The European Commission’s reintroduction of export subsidies for chilled and frozen pork exports in November 2007 is one sign of the difficult times facing EU pork producers. High feed costs combined with environmental regulations and increasing costs of all inputs have led to negative returns in the industry. The EU has historically been the largest pork exporter in the world, but the combination of higher production costs and increased domestic demand (partially attributed to the addition of new member states) contribute to more moderate export forecasts from both USDA and the European Commission. USDA forecasts show U.S. pork exports surpassing EU exports during 2007 and continuing to exceed them throughout the outlook period.
Next: U.S. Beef Imports
USMEF Market Intelligence
Pork Export Forecast
Introduction
Following is the second in a four-part series from the U.S. Meat Export Federation (USMEF) that examines key statistics and trends from the U.S. Department of Agriculture’s beef and pork trade outlook forecast for 2008 through 2017, which was developed in November 2007 and released last week. The USDA 10-year outlook is a scenario based on what would be expected to happen under a continuation of current farm legislation and specific assumptions about external conditions. It is not a forecast. USDA data is based on carcass weight equivalent (CWE) and does not include variety meats.
Highlights
The United States is expected to lead the global pork export market over the coming decade, with our share of global exports increasing from an estimated 28 percent last year to 32 percent in 2017, according to 10-year projections released last week by the U.S. Department of Agriculture (USDA).
Despite a forecast for reduction in U.S. pork production in 2009, 2010 and 2011, USDA expects pork exports to continue to grow steadily, most likely fueled by strong global demand and the weak U.S. dollar. The USDA originally projected pork exports to increase 5 percent in 2008 and 3 percent per year thereafter throughout the balance of the 10-year outlook, however more recent forecasts call for a 16 percent increase in 2008 pork exports to 3.7 billion pounds. A number of factors influence the improved forecast, according to Erin Daley, USMEF manager of research and analysis, especially China’s domestic production and market access restrictions, recovery of exports to Mexico, and continued over-quota exports to Russia.
U.S. pork production also is expected to increase 5 percent in 2008, which is one of the factors that is expected to contribute to an anticipated 1 pound per capita increase in domestic pork consumption this year. It also is expected that increased production will have a moderating effect on prices, which will support increased consumption.
Beyond 2008, projections by the U.S. Meat Export Federation (USMEF) are slightly more optimistic, with forecast increases for 2009 through 2014 between 4 percent and 5 percent per year, according to Daley, who noted that the same factors that led to the improved 2008 forecast will drive export increases over the coming six years. In addition, the USMEF projection assumes approval of the South Korea/United States free trade agreement in 2009 and steady growth in exports to Japan – about 3 percent annually.
USDA forecasts 39 percent growth in U.S. pork exports over the next 10 years, or an additional 536,000 metric tons (1.18 billion pounds) for total 2017 exports of 1.9 million metric tons (nearly 4.2 billion pounds), up from 2007 estimated totals of 3 billion pounds.
Competitors
- Brazil – The USDA projects that Brazil’s 2008 pork exports will reach 775,000 metric tons (1.7 billion pounds), an 8 percent increase over 2007 exports of 715,000 metric tons (1.57 billion pounds). The USDA previously had projected Brazil’s pork exports for 2008 at 584,000 metric tons, but later revised that estimate.
Brazil exported 24 percent of its pork production in 2007, and production is projected to grow 4 percent in 2008 while domestic consumption increases only 2 percent. Already, annual domestic pork consumption in Brazil is less than one-third of that for beef and poultry (26.4 pounds of pork per person versus 81.4 pounds of beef and 83.6 pounds of poultry on a carcass weight basis).
Brazil’s pork exports are expected to slow to 1 percent growth in 2009 followed by a 3 percent fall in 2010, but then bounce back to average 2 percent to 5 percent annual growth through 2017.
Russia is Brazil’s largest pork export market, taking 45 percent of Brazilian exports in 2007. Brazil’s exports to Russia benefit from a lower duty (11.25 percent versus 15 percent for the United States) and generally fall under the 193,400 metric ton (426.3 million pounds) tariff rate quota (TRQ) versus the United States’ TRQ of 49,800 metric tons (nearly 110 million pounds).
The other top destinations for Brazilian pork exports in 2007 were Hong Kong with 18 percent and Ukraine with 10 percent. Brazil has negotiated direct access to China, but does not have any approved plants at this time. Brazil also exports smaller volumes of pork to Singapore, Argentina, Angola, Albania, Uruguay, Moldova and the United Arab Emirates. Brazil currently does not have access to most of the top markets for U.S. pork, including Japan, Mexico, Canada, Korea, Australia and the European Union. Brazil’s market access, depending primarily on its disease status, will impact future growth in the country’s pork exports. The strengthening of the Brazilian currency, the real, also could impact Brazil’s future pork exports, as November 2007 export values increased 16 percent compared to November 2006 while export volumes increased only 2.6 percent.
- Canada – USDA has reduced its export forecast for Canada, with new estimates showing relatively flat exports over the outlook period. The strong Canadian dollar has had a profound impact on livestock and meat trade flows in North America. U.S. imports of Canadian slaughter hogs increased 20 percent in 2007 and feeder imports increased 12 percent for a combined total of about 10 million head. This resulted in lower Canadian pork production and exports in 2007, and increased U.S. pork exports to Canada. USMEF’s Daley expects high feed and labor costs (partially due to the strong Canadian dollar) will continue to impact Canadian pork production and thus pork exports.
- European Union (EU) – EU exports also have been revised to show a 10 percent drop in exports during 2008 (totaling 1,147,000 metric tons – more than 2.5 billion pounds) and exports are not expected to exceed 2006 volumes until 2016. The export volumes for 2016 are reduced from last year’s estimate of 1,617,000 metric tons (3.56 billion pounds) to 1,281,000 metric tons (2.82 billion pounds).
According to Daley, the reduction in expected EU exports likely reflects expected contraction in EU pork production. The European Commission’s reintroduction of export subsidies for chilled and frozen pork exports in November 2007 is one sign of the difficult times facing EU pork producers. High feed costs combined with environmental regulations and increasing costs of all inputs have led to negative returns in the industry. The EU has historically been the largest pork exporter in the world, but the combination of higher production costs and increased domestic demand (partially attributed to the addition of new member states) contribute to more moderate export forecasts from both USDA and the European Commission. USDA forecasts show U.S. pork exports surpassing EU exports during 2007 and continuing to exceed them throughout the outlook period.
Next: U.S. Beef Imports