Economic headwinds continued to slow U.S. pork and beef exports in July, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). July pork exports totaled 166,604 metric tons (MT), down 4 percent from a year ago and the smallest since January. Export value was $443 million, down 23 percent from a year ago and the lowest monthly total in more than four years. For January through July, pork exports totaled 1.25 million mt (down 5 percent) valued at $3.32 billion (down 17 percent).
For U.S. beef, July exports totaled 91,955 mt, down 10 percent from a year ago and the smallest volume since 2010. Export value was $555.7 million, down 11 percent. For January through July, beef export volume was down 10 percent to 619,064 mt. Export value was $3.8 billion, 2 percent below last year’s pace.
“Market access issues and the sustained strength of the U.S. dollar continue to make 2015 a very tough year for red meat exports,” said Philip M. Seng, USMEF president and CEO. “On the beef side, exports are also constrained by lower production, but the herd rebuilding that is currently limiting our beef supplies is overdue, and will pay dividends in 2016 and beyond.”
Closure of the Russian market to the top three global pork suppliers has not only cut off direct U.S. exports to Russia but also caused an influx of European and Canadian pork into key markets in Asia, Oceania and Latin America. Compounded by larger production in the major exporting countries, pork prices have been pressured in most major markets, with the exception of China. Even though the record spread between prices in China and the U.S. indicates large export opportunities, limited access for U.S. pork means the benefits are primarily accruing to European suppliers. U.S. beef’s lack of access to the Chinese market continues to result in missed opportunities in China and impacts the price U.S. beef cuts command in other Asian markets.
China’s mid-August devaluation of the yuan sent currencies of several key importing countries and large competitors lower versus the U.S. dollar. For example, the Korean won, the Taiwanese dollar and the Mexican peso all weakened significantly. As for competitors, the Australian and New Zealand dollars have been trading at levels not seen since 2009 and the Brazilian real is at its weakest point in more than a decade.
“U.S. exports were already facing a very challenging situation with regard to exchange rates, and that situation worsened over the past three weeks,” Seng explained. “This means we must work even harder to differentiate U.S. meat based on attributes other than price by educating international buyers on the quality and value our products deliver. This has always been a strong focus for USMEF, but it’s more important than ever that we establish and maintain customer loyalty in our key markets.”
Pork export volumes strong to Mexico, Korea; Latin America shows improvement
Pork export volume to Mexico remained strong through July, up 6 percent from a year ago to 411,425 mt. Export value was down 19 percent to $717.6 million, reflecting significantly lower prices for hams and other items commonly shipped to Mexico. The market has also seen an infusion of Canadian pork due to the closure of Russia (formerly Canada's third-largest market) and weakness of the Canadian dollar.
January-July exports to Korea were up 39 percent in volume (115,892 mt) and 31 percent in value ($338.3 million). July exports were still up sharply from a year ago but were the lowest since September, as the market may be cooling due to growing pork inventories.
Exports to Central and South America continued to gain momentum in July, as demand strengthened in key destinations Colombia, Honduras and Chile. January-July exports to the region increased 4 percent from a year ago to 70,731 mt, while value was down 4 percent to $180.4 million.
Japan remains the leading value market for U.S. pork, but exports continued to reflect sluggish demand, with large inventories lingering from the huge imports of European pork last year. January-July exports fell 13 percent from a year ago in volume (254,251 mt) and 19 percent in value ($972.8 million).
Through the first seven months of the year, pork exports accounted for 25 percent of total production and 21 percent for muscle cuts only (down from 28 percent and 23 percent, respectively, in the same period last year). Export value averaged $47.14 per head slaughtered, down 30 percent year-over-year and 15 percent lower than in 2013.
Bright spots for beef exports include Korea, Taiwan, Caribbean
Beef exports to Korea held up well in July despite a Middle East respiratory syndrome (MERS) outbreak that slowed restaurant traffic severely in June and created concerns about swollen beef inventories. For January through July, exports to Korea were up 11 percent year-over-year in volume (73,236 mt) and 12 percent in value ($498.2 million). Shipments to Taiwan were also strong in July, pushing exports in the first seven months of the year to 20,387 mt (up 5 percent from a year ago) valued at $183.3 million (up 13 percent).
July beef exports slumped in other Asian markets, most notably in Japan and Hong Kong. For January through July, exports to Japan were down 5 percent in volume (129,985 mt) and 6 percent in value ($806.5 million). Though it is still the leading destination for U.S. beef, exports to Japan continue to feel pressure from the lower duties on Australian beef (due to the Japan-Australia Economic Partnership Agreement implemented earlier this year) and the weak Australian dollar. July exports to Hong Kong were the lowest since 2013, before the U.S. regained access for bone-in cuts. Through July, 2015 exports to Hong Kong were down 20 percent in volume (65,169 mt) and 16 percent in value ($477 million) from a year ago.
Beef exports to Mexico held up relatively well through July despite the weak peso, falling 8 percent from a year ago in volume (125,780 mt) and 2 percent in value ($625.7 million). Smaller Western Hemisphere markets performing well in 2015 include the Dominican Republic (up 28 percent in volume to 4,205 mt and 27 percent in value to $32.6 million) and Guatemala (2,554 mt, up 23 percent, valued at $15.3 million, up 22 percent).
January-July beef exports accounted for 13 percent of total production and 10 percent for muscle cuts only (down from 14 percent and 11 percent, respectively, in the same period last year). Export value averaged $289.41 per head of fed slaughter, up 4 percent year-over-year.
Momentum for lamb exports short-lived
U.S. lamb exports had shown improvement in June but slumped again in July, dropping 20 percent from a year ago to just 752 mt. July export value plunged 50 percent to $1.5 million. For January through July, exports were down 14 percent in volume (5,507 mt) and 31 percent in value ($11.5 million) from a year ago. Exports achieved promising growth in Hong Kong and some Caribbean destinations, but these results were offset by declines in most other markets.