Korea’s Pork Imports Strong in May; Beef Imports Lower

Chart comparing Korea's Pork Carcass prices monthly from January 2011 through December 2014 in South Korean won

South Korea’s pork prices rebounded strongly in the first half of this year, spurred by PEDV-related supply concerns and bullish demand, partly influenced by consumer concerns about avian influenza. In May, hog carcass prices were at $2.30 per pound, up nearly 60 percent from last year’s low levels, stimulating larger pork imports. This price increase is not quite as dramatic in Korean won terms, but the stronger won has also assisted import growth. In the second half of the year, Korea’s pork production is expected to decline by 4 to 5 percent, reflecting PEDV-related losses this past winter. So the outlook for imported pork remains positive – although volumes might slow following the summer peak demand period, especially as inventories of frozen EU bellies appear to be ample.

South Korea’s pork/pork variety meat imports held strong in May at 30,280 metric tons (mt), up 12 percent from a year ago. Imports (mainly bellies) from the EU (13,446 mt, +29 percent) were especially large, led by Germany (4,420 mt, +45 percent), Spain (3,003 mt, +48 percent) and Austria (1,326 mt, +42 percent). Imports from the United States (10,810, +11 percent) were also higher year-over-year, while volumes were lower from Canada (3,043 mt, -20 percent) and Chile (2,308 mt, -8 percent).

Chart comparing Korea's Pork & Variety Meat Exports monthly from 2010 through 2014 in Metric Tons.Chart comparing Korea's Beef & Variety Meat Exports monthly from 2010 through 2014 in Metric Tons

Korea’s January-May imports were up 7 percent to 156,373 mt, including a surge from the EU (68,848 mt, +32 percent) as European suppliers shipped larger volumes to most major Asian destinations to offset the loss of the Russian market. Import volume from the U.S. was only modestly higher (58,499 mt, +2 percent) but value was up 10 percent to $177.5 million.

Similar to pork, Korea’s beef prices have also surged this year, with May Hanwoo carcass prices averaging $7.90 per pound, up 17 percent from last year, in U.S. dollar terms (and also reflecting the stronger won). Korea’s beef production is expected to decline over the next four to five years, after exceeding the ideal production levels over the past two years. Accordingly, imports are expected to increase to meet demand for more affordable beef.

After two large months, Korea’s beef/beef variety meat imports slowed in May (23,072 mt, -1 percent from a year ago), though imports were up slightly from both the U.S. (7,773 mt, +1 percent) and Australia (12,847 mt, +1 percent).

Chart comparing Korea's Hanwoo Carcass prices monthly from January 2012 through December 2014 in South Korean won

January-May imports totaled 131,058 mt, up 7 percent. This included growth from the U.S. (47,614 mt, +13 percent) and Australia (70,500 mt, +9 percent), while imports were significantly lower from New Zealand (11,838 mt, -18 percent) and Canada (627 mt, -40 percent). On a value basis, imports from the U.S. were up by nearly one-third ($308.17 million, +32 percent) and captured 42 percent of Korea’s total import value (up from 37 percent during the same period in 2013). Korea’s imports of chilled U.S. beef were up 16 percent in volume (4,087 mt) and 29 percent in value ($39.6 million).

On the trade policy front, Australia and Canada are scrambling to get their free trade agreements with Korea implemented by the end of this year to avoid falling further behind their competitors on tariff rate reductions. Australia negotiated a tariff reduction schedule for beef imports similar to the Korea-U.S. FTA, but it contains no “catch-up” provision. So even if the Australian agreement enters into force by the end of 2014, rate reductions will trail the U.S. schedule by nearly three years (the Korea-U.S. FTA entered into force on March 15, 2012). The U.S. is still the only major beef supplier that has implemented an FTA with Korea, though its tariff rate advantage has been largely offset in recent months by weakness of the Australian and Canadian dollars.

Canada is in much the same position as Australia when it comes to beef, and is the only major supplier of pork to Korea that still does not have an FTA in effect. Therefore, Canadian pork currently faces higher tariff rates in Korea than pork imported from the U.S., EU and Chile. With this disadvantage, Canada’s January-May market share slipped from 14 percent in 2012 to only 9 percent in 2014.

Import data source: Global Trade Atlas