U.S. Meat Exports Disappointing in August

U.S. beef and pork exports struggled in August, remaining below year-ago levels, according to data released by USDA and compiled by USMEF. August beef exports totaled 84,167 metric tons (mt), down 18 percent from a year ago. Beef export value was down 24 percent to $498 million, the lowest in 18 months. For the first eight months of 2015, exports were down 11 percent in volume to 703,231 mt and dropped 5 percent in value to $4.31 billion.

Beef export value per head of fed slaughter has averaged $286.51 this year, up $9.28 from the same period in 2014. Exports accounted for 13 percent of total production and 10 percent for muscle cuts, each down about one percentage point from the same period last year.

For U.S. pork, August exports totaled 160,719 mt, down 1 percent from a year ago, while export value fell 19 percent to $429.8 million – the lowest monthly value in more than four years. For January through August, exports were down 5 percent in volume to 1.41 million mt, while value was down 17 percent to $3.75 billion.

Pork export value per head slaughtered has averaged $49.78 this year, down $15.50 from the same period in 2014. Exports accounted for 24 percent of total production and 21 percent for muscle cuts, down from 28 percent and 23 percent, respectively, last year.

An already-tough global business climate became even more difficult on Aug. 11, when China’s devaluation of the yuan added pressure to the currencies of several key importing countries and large competitors against the U.S. dollar. Customer currencies moving significantly lower included the Korean won, the Taiwanese dollar and the Mexican peso. On the competitor side, the Australian, New Zealand and Canadian dollars have traded at the lowest levels since the global financial crisis, the Brazilian real hit record lows in September, and the euro and the Chilean peso are at their lowest levels in 12 years.

“Although our direct red meat exports to China are quite limited, the aftershocks of China’s currency devaluation and concerns about the global economy were felt across the world,” said Philip Seng, USMEF president and CEO. “This definitely impacted demand in many of our key export destinations.”

On a positive note, Seng said price gaps with some key competitors began to narrow in recent weeks. Australian cattle producers are finally rebuilding their herds after nearly three years of drought-induced liquidation. Pork prices in the European Union have recently stabilized, though the EU industry continues to struggle with the loss of the Russian market, which closed to EU pork in early 2014.

“A long-awaited slowdown in Australian cattle slaughter finally materialized this summer, and Australian beef exports have begun to pull back from their record pace,” Seng explained. “European pork prices also seem to have found a bottom, and this should help level the playing field in those key Asian markets that saw a large influx of European pork over the past 18 months. It is important that we continue to identify opportunities to recapture and defend market share so that U.S. exports can finish strong in what has been a very difficult year.”

Import slowdowns in Japan and Hong Kong, weak Mexican peso hamper beef exports

Japan’s August beef imports from all suppliers were down 36 percent year-over-year, including a 31 percent drop from the United States, as its frozen inventories remain at very high levels. Through August, U.S. exports to Japan were down 9 percent in volume (146,575 mt) and 11 percent in value ($906.4 million) as lower prices for short plate and other popular cuts failed to stimulate demand. Prior to the recent slowdown in Australia’s production, Japanese importers continued to stock up on Australian beef, benefiting from lower tariffs through the Japan-Australia Economic Partnership Agreement and the weak Australian dollar.

Japan remains the leading destination for U.S. beef, however, as exports to Mexico are feeling the impact of record lows for the peso – falling 8 percent in volume (142,536 mt) and 4 percent in value ($712.1 million) in the first eight months of 2015.

Hong Kong took its smallest volume of U.S. beef in more than three years in August, as January-August exports dropped 25 percent in volume (70,459 mt) and 23 percent in value ($514.1 million).

On the positive side, beef exports to South Korea remained ahead of their 2014 pace through August, increasing 10 percent year-over-year in volume (84,073 mt) and 8 percent in value ($565.5 million).

U.S. beef continues to perform very well in Taiwan, with exports climbing 7 percent in volume (24,440 mt) and maintaining a record value pace ($220.9 million, up 16 percent). In both Korea and Taiwan, U.S. beef continues to expand its share of chilled imports, with increased retail featuring.

Although January-August exports to the Middle East were lower than a year ago, the region saw an uptick in demand in August for variety meats destined for Egypt, as well as muscle cuts to the United Arab Emirates and Kuwait.

Pork exports to Mexico solid, but demand slows in other key markets

Pork exports to Mexico remain strong, with January-August volume up 6 percent from a year ago to 471,481 mt. Export value was down 19 percent to $827.9 million, reflecting lower prices for hams and other popular items.

Demand in Korea has slowed from its red-hot pace, as August pork exports were still higher year-over-year but down significantly from recent months. January-August export volume was up 37 percent to 122,387 mt, valued at $355 million (up 28 percent).

Japan’s imports of chilled U.S. pork rebounded in July and August, but a big decline in frozen demand pushed total U.S. exports down 13 percent (to 282,448 mt) through August, valued at $1.09 billion (down 19 percent). Large frozen inventories, partly reflecting increased imports of European pork in 2014, have contributed to lower Japanese imports this year.

Although China’s hog prices have been more than double those in the U.S., the majority of China’s import growth has been from Europe, as EU suppliers held price advantages on key items and enjoy significantly better market access conditions. U.S. exports to China/Hong Kong in August were up 9 percent from last year (24,890 mt) but were still the smallest since February. January-August exports were down 12 percent from a year ago in volume (210,294 mt) and fell 17 percent in value ($442.6 million).

Demand in Central and South America softened in August, as pork exports were the lowest since January. But for January through August, exports to the region were still up 4 percent in volume (80,153 mt), while value dropped 5 percent to $203.8 million. Strong volumes to Honduras, Chile and Guatemala helped offset a slowdown in Colombia, though Colombia remains the region’s largest destination for U.S. pork.

Lamb exports remain sluggish in August

U.S. lamb exports continued to slump in August, posting the second-lowest volume of the year at 586 mt, down 27 percent from a year ago, while export value dropped 33 percent to $1.43 million. For January through August, exports were down 15 percent in volume (6,093 mt) and 32 percent in value ($13 million). Growth markets in 2015 include Saudi Arabia, Hong Kong and Costa Rica, but these results were offset by declines in Mexico, Canada and several other markets.

Complete January-August export results are available on the USMEF statistics webpage.

For more information, please contact Joe Schuele at jschuele@usmef.org or 303-226-7309.

Editor’s notes:

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