South Korea’s beef imports set another new value record in 2015, increasing 9 percent year-over-year and eclipsing $2 billion for the first time. Import volume was 331,305 metric tons (mt), up 5 percent from 2014 but trailing the 2003 record of 363,943 mt. That year the United States was the primary supplier with 68 percent market share, supplying nearly 250,000 mt. In 2015, U.S. market share was nearly 35 percent, down slightly from 2014, while Australia’s share increased from 55 to 57 percent.
Korea’s imports of chilled beef climbed to a record 50,924 mt, up 11 percent year-over-year, driven by strong growth from the U.S. (15,799 mt, +39 percent) and a small increase from Australia (34,983 mt, +3 percent). Retail promotions of U.S. beef, renewed interest in short ribs and chuck short ribs, as well as increased availability of popular Asia cuts such as chuck flap tail, top blade and boneless short ribs helped boost U.S. exports. Interest in the chuck short ribs is particularly high in Korea’s retail sector, accounting for nearly 40 percent of all retail sales of imported beef.
Korea’s high domestic cattle and beef prices underpinned the demand for larger imports. Hanwoo carcass prices spiked in the second half of the year, setting new records in October before easing slightly at the end of the year. Prices averaged $7.70 per pound in 2015, up 11 percent year-over-year.
Hanwoo carcass prices also started 2016 on a high note, most recently up 32 percent from a year ago and the highest since the October 2015 peak. In U.S. dollars, prices averaged $8.10 per pound, up 18 percent. Continued tight domestic supplies should support beef imports again this year, and the U.S. should be in a position to gain market share as Australia’s production continues to slow.
Although the Korean won started 2016 on a weaker trend, averaging 1210 won/U.S. dollar last week, tariff rates dropped again with the start of the new year and it is likely that large volumes will clear customs in January as importers waited for the lower duties. The duty on U.S. chilled and frozen beef is now 26.7 percent, down from 29.3 last year. Australian beef pays 32 percent and the duty for Canadian beef is 34.6 percent.
Korea’s pork/pork variety meat imports reached $1.4 billion in 2015, up 13 percent year-over-year and trailing only the 2011 record ($1.56 billion). Import volume of 482,536 mt was up 24 percent from 2014, and was also the second-largest on record (2011 volume was 509,914 mt). Volumes increased from all suppliers but the EU saw a slight increase in market share to 51.6 percent. U.S. share held steady at 30.9 percent. Bellies remain the largest item from the EU, but various EU member states also started shipping more collar butts and even picnics, which is not an EU item traditionally seen in this market. The weak euro helped Europe’s already competitive prices, allowing EU pork to compete on non-traditional items.
Germany and Spain are the primary sources from the EU, but Denmark, Austria, the Netherlands, Belgium, France and Ireland all shipped significant volumes as well. Canada (8.6 percent market share), Chile (6.6 percent), and Mexico (2 percent) also saw growth, with Mexico emerging as the largest supplier of chilled pork to Korea. Korea’s total chilled pork imports were up 23 percent to 17,278 mt, led by Mexico (5,536 mt, +38 percent), the U.S. (5,057 mt, -10 percent), Canada (3,982 mt, +93 percent) and Chile (2,355 mt, +10 percent).
Korea’s domestic pork carcass prices in 2015 averaged 3 percent higher year-over-year in won, although prices in U.S. dollars reflected the weaker won, falling 4 percent to $2.07 per pound. Prices dropped below 2014 levels in September and remained lower through the end of the year, partly reflecting a rebound in domestic production. In January, prices are edging higher but are still down 3 percent from a year ago in won and down 13 percent in U.S. dollars to $1.72 per pound.
In 2016, duties on all U.S. pork except chilled boneless cuts have been eliminated through the Korea-U.S. Free Trade Agreement. Last year was the final year of duties on frozen boneless pork cuts such as picnics and butts – which paid 4 percent in 2015, but now that duty has been phased to zero. The same cuts from Canada will pay a 15 percent duty this year. Duties on chilled U.S. pork are now 11.3 percent, while Canada’s rate is 19 percent and Mexico (which does not have an FTA) pays 22.5 percent. All duties on Chilean pork have been eliminated.