August beef exports soar to new heights; pork export value still under pressure

U.S. beef exports set new records in August with export value topping $750 million for the first time, according to data released by USDA and compiled by the U.S. Meat Export Federation. August pork exports were fairly steady with last year’s volume, but retaliatory duties in key markets continued to pressure pork export value.

August beef exports totaled 119,850 metric tons, up 7 percent from a year ago, valued at $751.7 million—up 11 percent year-over-year and easily exceeding the previous record of $722.1 million reached in May 2018. For January through August, beef exports totaled 899,300 metric tons, up 9 percent from a year ago, while value climbed 18 percent to $5.51 billion.

For the third consecutive month, beef muscle cut exports set a new volume record in August at 95,181 metric tons (up 9 percent from a year ago), valued at $679.6 million (up 13 percent). Through August, muscle cut exports were 14 percent ahead of last year’s pace in volume (692,234 metric tons) and 21 percent higher in value ($4.93 billion).

August exports accounted for 13.2 percent of total beef production, up from 12.5 percent a year ago. For beef muscle cuts only, the percentage exported was 11.2 percent, up from 10.4 percent last year. For January through August, exports accounted for 13.5 percent of total beef production and 11.1 percent for muscle cuts—up from 12.8 percent and 10.1 percent, respectively, last year. Beef export value averaged $320.92 per head of fed slaughter in August, up 11 percent from a year ago. The January-August average was $318.66 per head, up 16 percent.

“U.S. beef exports continue to achieve tremendous growth, not only in our mainstay Asian markets but in the Western Hemisphere as well,” said USMEF President and CEO Dan Halstrom. “USMEF is excited about the recent market access developments achieved by the Office of the U.S. Trade Representative and USDA, with favorable terms being preserved in Mexico, Canada and South Korea and trade talks getting underway with Japan. A trade agreement with Japan would bring opportunities for even greater expansion as U.S. beef becomes more affordable for Japanese consumers and is back on a level playing field with Australian beef.”

August pork export volume was down 1 percent from last year at 182,372 metric tons, while export value fell 3 percent to $494.1 million. Pork muscle cuts fared better in August, increasing 5 percent to 148,736 metric tons, but value still declined 1 percent to $414.7 million. Pork variety meat exports declined sharply in August in both volume (33,636 metric tons, down 20 percent) and value ($79.4 million, down 15 percent).

For January through August, combined pork and pork variety meat exports remained 1 percent ahead of last year’s record pace at 1.63 million metric tons, while value increased 3 percent to $4.32 billion. For pork muscle cuts only, exports increased 6 percent from a year ago in volume (1.31 million metric tons) and 4 percent in value ($3.58 billion).

August exports accounted for 21.9 percent of total pork production, down from 23.1 percent a year ago, while the percentage of muscle cuts exported held steady at 19.2 percent. For January through August, exports equaled 26.3 percent of total pork production (down from 26.9 percent a year ago), while the percentage of muscle cuts exported was 22.8 percent (up from 22.4 percent). Pork export value averaged $44.29 per head slaughtered in August, down 8 percent from a year ago, while the January-August per-head average dropped 1 percent to $53.28.

U.S. pork currently faces retaliatory duties in two markets: China and Mexico. China’s duty rate on 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 (pork variety meats continue to enter Mexico duty-free). Beginning in June, Mexico also imposed a 15 percent duty on sausages and a 20 percent duty on some prepared or preserved hams and shoulders.

“Pork exports have posted an impressive performance in 2018, but the retaliatory duties are a clearly a significant obstacle,” Halstrom explained. “The fact that U.S. trade officials were able to secure duty-free access for U.S. red meat in the new U.S.-Mexico-Canada Agreement is critically important, and we are hopeful that duty-free access for U.S. pork entering Mexico will be restored soon. Tariff relief in China may not come as quickly, but USMEF continues to work with industry partners to keep as much product as possible moving to China while also working aggressively to expand exports in other key markets, including Korea, Central and South America, the ASEAN region and Australia.”

U.S. beef also currently faces retaliatory duties in two markets: China and Canada. China’s duty rate increased from 12 to 37 percent in July, with the higher rate applying to all eligible products. Canada’s 10 percent duty, which also took effect in July, applies to cooked/prepared beef products. All other U.S. beef still enters Canada duty-free.

Beef exports to Korea already near last year’s value record

August beef exports to South Korea were up 42 percent from a year ago in volume (24,482 metric tons) and set another new value record at $176.4 million (up 60 percent). This pushed January-August exports to 161,379 metric tons, up 39 percent from a year ago, while export value reached $1.15 billion—up 54 percent and just short of the 2017 full-year record of $1.22 billion. These results included a 30 percent increase in chilled beef exports to 35,683 metric tons, valued at $343.7 million (up 41 percent). Through August, U.S. beef accounted for 58 percent of Korea’s chilled imports. Under the Korea-U.S. Free Trade Agreement that took effect in 2012, Korea’s duty rate on imports of U.S. beef has declined from 40 to 21.3 percent and will be eliminated by 2026. These terms are preserved in the revised KORUS agreement signed Sept. 24.

Beef exports to leading market Japan climbed 8 percent from a year ago in August to 33,548 metric tons, including a post-BSE record for muscle cuts (28,863 metric tons). August export value was $209.3 million, up 5 percent from a year ago and the highest since 1996. For January through August, exports to Japan were up 7 percent from a year ago in volume at 224,785 metric tons, while value increased 11 percent to $1.42 billion. This included a slight increase in chilled beef to 100,952 metric tons, valued at $807.2 million (up 9 percent). U.S. beef accounted for nearly 50 percent of Japan’s chilled imports through August.

January to August additional highlights for U.S. beef exports

Exports to Mexico were up 1 percent from a year ago in volume (158,496 metric tons) and were 8 percent higher in value ($693.9 million). Mexico is the leading destination for U.S. beef variety meat exports, which have trended lower in recent months to fall 8 percent below last year’s pace at 64,642 metric tons. Variety meat value to Mexico remained steady with last year at $148.7 million.

While beef shipments to China/Hong Kong slowed in the summer months, January-August exports remained 6 percent higher than a year ago in volume (79,584 metric tons) and 30 percent higher in value ($638.8 million). Exports to China, which reopened to U.S. beef in June of last year, were 4,580 metric tons valued at $39.8 million.

Beef exports to Taiwan soared 36 percent above last year’s pace in volume (38,923 metric tons) and 40 percent higher in value ($359.9 million). Chilled exports to Taiwan were up 32 percent in volume (15,676 metric tons) and 41 percent in value ($197.1 million), as the United States captured 74 percent of Taiwan’s chilled beef market—the highest share of any Asian destination.

Strong growth in the Philippines pushed beef exports to the ASEAN region 11 percent ahead of last year’s pace in volume (29,261 metric tons) and 23 percent higher in value ($160.7 million).

Led by sharply higher exports to Costa Rica, Guatemala, Panama and El Salvador, export volume to Central America increased 26 percent from a year ago to 9,519 metric tons, while value climbed 22 percent to $51.6 million.

Japan, Korea and Latin America bolster August pork exports

August pork exports to leading value market Japan increased 10 percent from a year ago to 34,935 metric tons, valued at $146.8 million (up 5 percent and the highest of 2018). For January through August, exports were up 2 percent from a year ago in both volume (265,250 metric tons) and value ($1.1 billion).

Pork exports to Korea continued to surge in August, increasing 39 percent in volume to 11,303 metric tons and 40 percent in value to $31.3 million. This pushed January-August exports to 159,536 metric tons (up 43 percent) valued at $455.6 million (up 49 percent). Exports of pork variety meat, including bungs and feet, have contributed significantly to this growth. Through August, pork variety meat exports to Korea increased 84 percent from a year ago in volume (10,358 metric tons) and more than doubled in value to $32.4 million (up 111 percent). Most U.S. pork products enter Korea duty-free, and this will continue under the revised KORUS agreement.

August pork exports to leading volume market Mexico fell 4 percent from a year ago to 62,319 metric tons, while value dropped 21 percent to $103 million. Through August, exports to Mexico remained 2 percent ahead of last year’s record pace at 532,034 metric tons, but value declined 6 percent to $921.1 million.

August exports to the China/Hong Kong region fell 43 percent from a year ago to 19,732 metric tons, with value dropping 32 percent to $52.9 million. For January through August, exports were down 24 percent in volume (257,939 metric tons) and fell 13 percent in value to $615.9 million.

January to August highlights for U.S. pork exports

Led by strong growth in Colombia and Peru, exports to South America increased 29 percent from a year ago in volume (82,153 metric tons) and 24 percent in value ($204.4 million). A slow start to the year kept exports to Chile below last year’s record volume pace, but shipments regained momentum in July and August.

Following a record performance in 2017, pork exports to Central America surged 20 percent higher in volume (52,528 metric tons) and increased 17 percent in value ($123.8 million). Pork exports to all seven Central American nations have achieved double-digit growth in 2018.

Exports to the Dominican Republic continue to gain momentum, increasing 30 percent in volume (29,480 metric tons) and 25 percent in value ($64.5 million).

Led by strong growth in the Philippines and Vietnam, exports to the ASEAN region increased 29 percent in volume (39,021 metric tons) and 28 percent in value ($100.1 million). The ASEAN is an especially important destination for pork variety meat, with these exports nearly doubling from a year ago in both volume (14,273 metric tons, up 99 percent) and value ($24.2 million, up 94 percent).

Exports to Australia were 9 percent ahead of last year’s record pace in both volume (51,070 metric tons) and value ($147.5 million). Australia is the third-largest destination for U.S. hams exported for further processing, trailing only Mexico and China/Hong Kong.

Lamb variety meat exports surge in August, but muscle cuts trend lower

August exports of U.S. lamb reached the largest monthly volume this year (1,353 metric tons, up 105 percent from a year ago), due primarily to large shipments of lamb variety meat to Mexico. August export value was just under $2 million, up 16 percent year-over-year. Lamb muscle cut exports took a step back in August, totaling just 142 metric tons—down 32 percent from a year ago and the lowest since January.

Through August, lamb exports were 60 percent ahead of last year’s pace in volume (8,033 metric tons) and 20 percent higher in value ($15.4 million). This growth was fueled mainly by stronger variety meat demand in Mexico, but muscle cut exports increased significantly to the Caribbean, the United Arab Emirates, Singapore and the Philippines.