13 May 2008

9 minute read

North America

“We’re seeing continued strong performance in both sectors,” said Erin Daley, USMEF manager of research and analysis. “The weak U.S. dollar is certainly a factor, and gains are being made despite the growing shortage of shipping containers to take our exports to overseas markets. That issue may become more significant in the second quarter, particularly as the South Korean beef market begins to heat up.”

U.S. Pork Exports

Pork exports for the first quarter totaled 366,411 metric tons (807.7 million pounds), 39 percent more than the first quarter of last year. When combined with 87,631 metric tons (193.2 million pounds) of pork variety meat exports (up 54 percent), the U.S. pork industry sold 454,042 metric tons (1 billion pounds) valued at more than $1 billion to international markets. March exports of 149,391 metric tons (329.3 million pounds) were second only to the monthly record set in February of 2008.

Japan resumed its position as the No. 1 volume and value market for U.S. pork, with exports up 11 percent in the first quarter: 105,780 metric tons (233.2 million pounds) sold for $336.6 million. March exports to Japan were up 24 percent compared to 2007, setting a new monthly record at 40,853 metric tons (90 million pounds). At the same time, Japan’s imports from the European Union (primarily Denmark) fell 20 percent. According to Daley, this trend is expected to continue since Danish hog numbers were down 10.4 percent in April. Danish producers are losing an estimated 47 euros ($72) per hog slaughtered, mainly due to high feed prices, according to the European Market Survey (MLC Economics).

U.S. pork exports to China and Hong Kong valued at nearly $170 million totaled 102,469 metric tons (225.9 million pounds) — 74,007 metric tons of muscle cuts and 28,462 metric tons of variety meat — 280 percent more than the first quarter of 2007. In March alone, pork plus pork variety meat exports to China and Hong Kong totaled 27,724 metric tons (61.1 million pounds) compared to 7,651 metric tons (16.8 million pounds) in March 2007, but down from the record 40,894 metric tons (90.1 million pounds) set in February 2008.

According to Chinese import statistics, the United States was the largest supplier during the first quarter, followed by the EU (France and Denmark) and Canada. Chinese pork production is expected to remain around 16 percent below the peak of 2005 due to continued disease issues. The decrease in Chinese production, as estimated by the U.S. Department of Agriculture (USDA), is around 6 million metric tons (13.2 billion pounds), compared to total (record) U.S. production of 9.96 million metric tons (21.9 billion pounds) last year.

U.S. pork exports to Mexico rebounded 3 percent from last year’s levels, totaling 78,646 metric tons (173.3 million pounds) valued at $123 million, while quarterly exports to Canada were 22 percent greater (39,995 metric tons or 88.1 million pounds) with monthly exports remaining at more than 13,000 metric tons (28.6 million pounds) since September last year.

The U.S. pork industry sold 39,864 metric tons (87.8 million pounds) to Russia during the quarter, an increase of 142 percent, including 7,186 metric tons (15.8 million pounds) of variety meat. Already the United States has met two-thirds of the annual tariff rate quota (TRQ) for Russia with exports valued at $85.7 million. In a surprise move, Russia banned imports from Canada in April then delisted a number of EU plants and, most recently, delisted four U.S. plants. Over the same first quarter of the year, Brazil’s exports to Russia have declined 17 percent.

U.S. pork (including variety meat) exports to South Korea in the first quarter were 1 percent higher at 35,270 metric tons (77.7 million pounds) valued at $72 million.

Another monthly record was set in U.S. pork exports to the ASEAN region in March: 4,608 metric tons (10.1 million pounds), primarily to the Philippines, Singapore and Vietnam, again showing the competitiveness of U.S. pork enhanced by the weak dollar. Exports to the ASEAN valued at $17.6 million totaled 10,119 metric tons (22.3 million pounds) for the first quarter, an increase of 239 percent.

Exports to the European Union (EU) increased 80 percent to 8,452 metric tons (18.6 million pounds), primarily destined for France, Germany and Britain. They were valued at $22 million. Daley noted that EU pork production is contracting, resulting in higher prices, but not enough to offset the high costs of production. Export refunds for chilled and frozen pork continue and the 100,000 metric tons (220.4 million pounds) of pork in storage, subsidized by private storage aid, will be released onto the market through the summer months.

Exports to Central and South America were up 6 percent, totaling 8,410 metric tons (18.5 million pounds) valued at $17.4 million, with most of the growth occurring in exports to Honduras.

Exports to the Caribbean were up 48 percent to 6,884 metric tons (15.1 million pounds), including the Dominican Republic, which was up 250 percent to 2,778 metric tons (6.1 million pounds). The exports were valued at $13.4 million.

U.S. Beef Exports

In the first quarter of 2008, U.S. beef exports increased 37 percent over the first quarter of the previous year to 117,730 metric tons (259.5 million pounds) and beef variety meat exports increased 19 percent to 79,913 metric tons (176.1 million pounds) for a combined 29 percent increase to 197,643 metric tons (435.7 million pounds) – a 40 percent increase in value to $682.7 million.

March exports of beef plus beef variety meat totaled 67,669 metric tons (149.1 million pounds) compared to 51,005 metric tons (112.4 million pounds) last year and 99,189 metric tons (218.6 million pounds) in 2003. Mexico and Canada remain the top two markets: exports to Mexico are up 21 percent for the quarter to 97,353 metric tons (214.6 million pounds) valued at $328.7 million while exports to Canada are up 64 percent to 32,449 metric tons (71.5 million pounds) valued at $145.4 million.

Excluding variety meat, Japan is the No. 3 market, with exports increasing 23 percent in the first quarter to 9,517 metric tons (20.9 million pounds) with a value of $50.7 million, an increase of 33 percent over the previous first quarter. According to Japanese import statistics, beef imports from Australia fell 16 percent in the first quarter to 81,898 metric tons (180.5 million pounds), but still accounted for 80 percent of total Japanese beef imports. Japan’s chilled beef imports from the United States increased 57 percent during the first quarter, reflecting growth in the retail presence of U.S. beef compared to last year and an increase in the supply of U.S. beef that meets Japanese import requirements. Japan’s delisting of National’s Brawley Beef plant did not keep Aeon from resuming U.S. beef sales in May — supported by USMEF’s “We Care” campaign.

Vietnam has emerged as the fourth-largest market for U.S. beef, with exports valued at $23 million totaling 9,016 metric tons (19.8 million pounds) in the first quarter. March exports to Vietnam were 3,600 metric tons (7.9 million pounds), breaking the previous monthly record of 3,145 metric tons (6.9 million pounds) set last October. Exports to Vietnam reflect the strong demand in the Greater China region amid tight supplies and high prices for both beef and pork, said Daley.

Exports to Taiwan continued to increase through March, with March exports at 2,243 metric tons (4.9 million pounds) up 37 percent from March last year and second only to the record set in November 2007. For the first quarter, exports were up 27 percent in volume and 37 percent in value (6,116 metric tons or 13.4 million pounds valued at $29.76 million). USMEF-Taiwan notes that importers are expecting higher U.S. prices with the resumption of U.S. beef exports to Korea, but also due to strong demand for beef from Australia and New Zealand in Russia and the EU. Taiwanese importers plan to continue to import U.S. beef even at higher prices, but demand could be constrained by dampened consumer purchasing power, Daley said. Due to the growing popularity of yakiniku restaurants, USMEF-Taiwan plans to promote chuck short ribs, short plate, chuck flap and other low- to medium-priced cuts.

“U.S. beef is popular at these barbecue-style restaurants due to its marbling and high quality attributes, and it is price-competitive with Australian beef – and a bargain compared to Australian wagyu,” Daley said. She noted that USMEF-Taiwan also initiated more promotion activities with high-end restaurants due to the recent price competitiveness of U.S. tenderloins, ribeyes and striploins. U.S. beef has a 65 percent market share of Taiwan’s chilled beef imports and a wide presence in retail stores.

First-quarter beef exports to the EU exceeded last year’s first quarter by 263 percent, totaling 3,335 metric tons (7.3 million pounds) valued at $20 million. The EU is facing tight supplies of beef due to restrictions on Brazilian beef imports, which permit only small volumes from less than 100 approved farms, and the impasse over Argentina’s export restrictions. Daley noted that Argentina has announced a complicated resolution to its beef export ban, which could result in a monthly allowance similar to the previous export quota, about 45,000 metric tons (99.2 million pounds) per month. Beef exports have not yet resumed, however.

Uruguay is exporting more beef to the EU in the absence of the other South American suppliers. It is benefiting from record prices at this time of unprecedented demand and total slaughter through April was up 12 percent year on year. Cow slaughter increased 10 percent, which will lead to a future tightening of supply, she said. At the same time, U.S. beef imports from Uruguay are down nearly 90 percent.

U.S. beef exports to the Caribbean were down 2 percent at 3,135 metric tons (6.9 million pounds) but up 12 percent in value to $15.6 million. Exports to Jamaica, the second-largest destination following the Bahamas, increased 35 percent to 567 metric tons (1.2 million pounds) valued at $2.6 million.

Exports to Hong Kong grew 4 percent over last year, due to strong volumes in January, but are still restricted to boneless beef from cattle under 30 months of age. According to Hong Kong import statistics, imports from Brazil increased 77 percent and accounted for 42 percent of the total.

“While USDA data do not show significant volumes of beef exports to Russia, judging from the number of Statements of Verification (SOVs) issued by the U.S. Agricultural Marketing Service (AMS), exports for December 2007 through April 2008 totaled about 5,300 metric tons (11.6 million pounds), including variety meat,” said Daley. “USMEF understands that both U.S. beef and pork are extremely competitive in Russia due to relatively high prices for Brazilian beef and pork and Australian beef. Australia’s beef exports to Russia are about five times larger than last year, further reflecting the drop in exports – and higher prices – from Brazil.”

Beef variety meat exports in the first quarter increased 40 percent in value to $176 million. Mexico, the top destination, jumped 29 percent to 47,541 metric tons (104.8 million pounds). Exports to the second largest market, Egypt, fell 13 percent to 17,950 metric tons (39.5 million pounds). Exports to Russia are beginning to recover, at 1,719 metric tons (3.7 million pounds), and exports to Central and South America, especially Peru, increased 79 percent to 1,668 metric tons (3.6 million pounds). Exports to the ASEAN also increased 95 percent to 1,236 metric tons (2.7 million pounds) in the first quarter.

TheCattleSite News Desk