Korea’s September Imports Remain Sluggish, but Fourth Quarter Outlook Brightens for Beef

Korea-Beef-imports.350jpg South Korea’s September meat imports continued to reflect large domestic protein supplies and a challenging economic climate. But the market has begun to show signs of positive momentum, especially in the beef sector.

Korea’s beef imports in September were down 1 percent from a year ago to 24,631 mt. For January through September, imports fell 2 percent to 218,215 mt as larger volumes from Australia (117,882 mt, +7 percent, including growth in less expensive grass-fed product) mostly offset smaller imports from the U.S. (74,395 mt, -10 percent) and New Zealand (23,577 mt, -6 percent). Korean-Short-Rib-prices350

Korea’s January-September imports of chilled U.S. beef were up 2.5 percent in volume (6,263 mt) and 11 percent in value ($54 million). The sharp increase in value is encouraging, but also reflects one of the current challenges for U.S. beef in Korea. Beef items typically exported to Asia have traded at record levels this year, due to increased access in Japan and Hong Kong, the strong recovery in exports to Taiwan and relatively tight supplies. This is in contrast to Australia, where drought-induced herd liquidation has generated more beef at lower prices, made even more affordable by a weaker Australian dollar.

With U.S. beef being priced closer to domestic Hanwoo beef, it has been more difficult to move the same volume as in the past two years. But this trend is shifting and the Korean market is heating up, due in part to a decline in seafood consumption (see more details, later in this article). U.S. short rib prices are up more than 30 percent from a year ago at wholesale to $7.26/pound, with Australian short rib prices also moving higher in the past week.

“We have definitely seen positive momentum for U.S. beef in October and look for a strong finish to this year,” said Jihae Yang, USMEF-Korea director.

Korea’s live cattle (600 kg steer) prices in 2013 are 6 percent above the year-ago level, though still more than 25 percent below the five-year average posted from 2006 through 2010. Korea’s beef carcass prices jumped significantly in late August and (as of Sept. 30) have increased about 5 percent since the beginning of the year.

September pork imports slow, may be nearing a bottom
koreapork350bKorea’s pork imports in September were down 15 percent from a year ago to 24,086 mt, with smaller volumes from all suppliers. Through the first nine months of the year, imports were down 22 percent to 247,837 mt. Canada is the only major supplier without an FTA, which was reflected in the import results (31,055 mt, down 33 percent). Imports were also lower from the EU (94,500 mt, -26 percent) and the U.S. (91,780 mt, -13 percent). Even with the challenging situation, U.S. pork market share has increased this year, to 37 percent up from 33.5 percent. And Korea’s pork imports should be nearing a bottom, with growth potential next year still dependent on the domestic pork situation.

Live hog (110 kg live weight) prices in 2013 have been at a five-year low and 12 percent below year-ago levels, reflecting a dramatic rebound from the FMD-driven herd culling in late 2010 and early 2011. Pork carcass prices strengthened in August and early September, but by the end of September had dipped back near January levels.

Seafood concerns could provide boost for red meat
Seafood is traditionally the second-most consumed food item in Korea, trailing only rice. From 2004 to 2010, annual per capita consumption of seafood (23.8 pounds) in Korea was about 50 percent higher than the combined per capita consumption of beef, pork and poultry (15.8 pounds). But recently Korea’s seafood consumption has been in decline, due in large part to concerns about excessive radiation from the disabled Fukushima Daiichi nuclear power plant in Japan.

Imports of frozen pollock from Russia – Korea’s most popular imported fish item – have also declined from a year ago. While China remains Korea’s leading foreign supplier of seafood, its percentage of the total market has been in decline since 2010. Whether Korea’s declining appetite for imported seafood is a lasting trend remains to be seen. But for the time being, it seems to have eased pressure on what had been a very crowded protein market.