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Red Meat Export Volume Fairly Steady in January; Pork Value Still Reflects Tariff Impact

January exports of U.S. beef and pork were slightly below last year’s volume levels while export value posted mixed results, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Beef exports slipped 1 percent year-over-year to 104,766 metric tons (mt), but value still increased 3 percent to $642.3 million. Export value per head of fed slaughter pulled back from the red-hot pace of 2018, averaging $284.86, down 3 percent from a year ago. January exports accounted for 12.2 percent of total beef production and 9.7 percent for muscle cuts only, down from 12.4 percent and 10.1 percent, respectively, in January 2018.

January pork exports were also down 1 percent from a year ago at 201,835 mt, with value dropping 9 percent to $494.1 million. Export value averaged $44.75 per head slaughtered, down 12 percent year-over-year. Exports accounted for 23.6 percent of total January pork production, down from 24.7 percent a year ago. For muscle cuts only the ratio was 20.3 percent, down from 21.5 percent.

Results for both beef and pork were bolstered by stronger variety meat volumes. Beef variety meat exports totaled 26,630 in January, up 7 percent from a year ago, valued at $81.8 million (up 19 percent). This was fueled by strong performances in Japan, the ASEAN region and Africa. Pork variety meat exports climbed 5 percent year-over-year to 41,143 mt, led by increases in Mexico, Japan, Central and South America and Taiwan. But value was still down 11 percent to $81 million, because exports to China, the leading market for U.S. pork variety meat, remain subject to China’s 50 percent retaliatory duties.

Japan, Korea set strong early pace for 2019 beef exports

January beef exports to leading market Japan increased 8 percent year-over-year to 25,925 mt, valued at $167 million (up 12 percent). Variety meat exports to Japan (mainly tongues) were especially strong, soaring by 36 percent in both volume (4,645 mt) and value ($31.4 million). January was the first full month in which competitors of U.S. beef received tariff relief in Japan under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with the import duty rate dropping from 38.5 to 27.5 percent on Dec. 30, 2018. This gap will widen further on April 1, when the rate for CPTPP countries drops to 26.6 percent.

“It’s great to see Japan’s demand for U.S. beef increase in January despite these tariff rate changes for our major competitors,” noted Dan Halstrom, USMEF president and CEO. “But this disadvantage will become more and more pronounced over time, so negotiations toward a U.S.-Japan trade agreement cannot come soon enough. The playing field needs to be leveled as quickly as possible so that the U.S. industry can continue to capitalize on booming meat demand in Japan.”

Following a record-shattering year, beef exports to South Korea increased 4 percent in January to 17,900 mt, with value up 10 percent to $134.3 million. U.S. beef enjoys a tariff rate advantage under the Korea-U.S. Free Trade Agreement (KORUS), with the import duty rate declining from 40 to 18.7 percent since KORUS was implemented in 2012 (the rates for Australian and Canadian beef are 24 and 26.6 percent, respectively). U.S. beef is benefiting from several new trends in Korea, including mid-priced steak restaurants (also underway in Japan), inclusion of beef cuts such as chuckeye roll and short plate in meal kits sold at retail and through e-commerce, and demand for a wider range of U.S. beef cuts, such as brisket point, in Korean barbecue establishments.

Other January highlights for U.S. beef include:

  • Export volume to Mexico was steady with last year at 21,194 mt, but value climbed 14 percent to $101.7 million. The results for beef muscle cuts were especially strong, increasing 16 percent in volume (12,532 mt) and 21 percent in value ($78.2 million).
  • Led by Indonesia and the Philippines, exports to the ASEAN region jumped 49 percent from a year ago in volume (4,644 mt) and 31 percent in value ($20.7 million). Variety meat exports more than doubled from a year ago to 1,941 mt (up 107 percent), with value up 85 percent to $3.8 million.
  • Strong growth in Costa Rica, Guatemala and Honduras drove beef exports to Central America up 39 percent to 1,508 mt, while value was up 36 percent to $8 million.
  • Exports to Taiwan were steady with last January at 4,215 mt, but value was down 12 percent to $36.8 million.
  • A slow month in Hong Kong partially offset growth in other markets, as exports fell by 36 percent in volume to 7,047 mt, while value was down 28 percent to $57.4 million.

Amid trade disputes, smaller markets step up demand for U.S. pork

Retaliatory duties continued to pressure U.S. pork exports to Mexico in January, with volume down 9 percent from a year ago to 66,293 mt. Export value absorbed an even harsher blow, dropping 28 percent to $96.1 million. While the U.S. is still Mexico’s main pork supplier, Canada’s January exports to Mexico were up 26 percent to 11,500 mt and EU exports increased 91 percent to 305 mt. Chile’s volume was steady at 690 mt.

Exports to China/Hong Kong also felt the sting of China’s retaliatory duties, dropping 16 percent from a year ago in volume (26,744 mt) and 32 percent in value ($53.2 million).

While Japan’s import duties on U.S. pork remain unchanged, CPTPP countries received tariff relief at the end of 2018 and will see another rate decrease on April 1. This likely contributed to the January decline in U.S. pork exports to Japan, which were down 6 percent from a year ago in volume (32,910 mt) and 8 percent in value ($135.2 million). Lower duty rates for European pork under the Japan-EU Economic Partnership Agreement (EPA) were implemented Feb. 1, so the EPA’s impact was not yet reflected in Japan’s January import data.

“Trade barriers in these large, mainstay markets are very unsettling for major customers of U.S. pork and are hurting the entire U.S. supply chain, so it is essential that they are addressed in a timely manner,” Halstrom explained. “On a positive note, the U.S. industry’s longstanding efforts to expand and diversify international destinations for U.S. pork have never been more important, and it is gratifying to see impressive growth in many of our emerging and developing markets.”

January highlights for U.S. pork include:

  • Led by continued record exports to Colombia and a surge in shipments to Chile, pork exports to South America increased 57 percent in volume (12,752 mt) and 61 percent in value ($31.3 million). Exports were also higher year-over-year to Ecuador and Uruguay.
  • Strong growth in Panama, Costa Rica and Guatemala moved exports to Central America 18 percent higher year-over-year in volume (7,271 mt) and 15 percent higher in value ($16.6 million).
  • Exports to the Dominican Republic remained on a roll, increasing 29 percent from a year ago in both volume (3,289 mt) and value ($7.2 million).
  • Growing exports to Canada (16,165 mt, +13 percent) indicate the U.S. is backfilling Canada’s product needs as more Canadian pork is bound for China, Japan and Mexico. Canadian pork production is not increasing, therefore Canada needs to import more U.S. pork to meet domestic demand. This situation will continue until retaliatory tariffs on U.S. pork exports to China and Mexico are removed and could intensify across other markets as China’s buying ramps up due to African swine fever.
  • Pork exports to both Australia and New Zealand were higher year-over-year in January, pushing results for Oceania up 22 percent in volume (9,272 mt) and 12 percent in value ($24.8 million).
  • Led by excellent growth in the Philippines and Singapore, exports to the ASEAN region were up 28 percent in volume (3,895 mt) and 25 percent in value ($9.9 million).
  • Strong demand in Taiwan pushed January exports to 2,561 mt (up 153 percent) valued at $4.9 million (up 70 percent). The results for pork muscle cuts were even more impressive, nearly tripling in volume (1,780 mt, up 196 percent) and climbing 149 percent in value to $3.8 million. Taiwan is importing less pork from the EU and Canada so U.S. pork is gaining market share, climbing from 9 percent in January 2018 to 19.5 percent this year.
  • Pork exports to Korea eased from the record-breaking pace of 2018 but remained strong at 18,491 mt, down 2 percent year-over-year, with value down 8 percent to $50 million.

Lamb exports trend higher in January

Muscle cut growth in the Caribbean and the United Arab Emirates, along with continued strong demand for variety meat in Mexico pushed January exports of U.S. lamb to 1,384 mt, up 87 percent from a year ago. Export value was $2.13 million, up 45 percent. For muscle cuts only, exports climbed 94 percent from a year ago in volume (244 mt) and 49 percent in value ($1.17 million).

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

Monthly charts for U.S. pork and beef exports are also available online.

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.
  • U.S. pork currently faces retaliatory duties in China and Mexico. China’s duty rate on frozen pork muscle cuts and variety meat increased from 12 to 37 percent in April and from 37 to 62 percent in July. Mexico’s duty rate on pork muscle cuts increased from zero to 10 percent in June and jumped to 20 percent in July. Beginning in June, Mexico also imposed a 15 percent duty on sausages and a 20 percent duty on some prepared hams.
  • U.S. beef faces retaliatory duties in China and Canada. China’s duty rate on beef muscle cuts and variety meats increased from 12 to 37 percent in July. Canada’s 10 percent duty, which also took effect in July, applies to HS 160250 cooked/prepared beef products.