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Pork Exports Post Strong Growth; Beef Results Mixed

11 May 2012

US - US pork exports finished the first quarter eight per cent higher in volume (598,058 metric tons) and 20 per cent higher in value ($1.66 billion) than last year’s record pace, according to statistics released by the USDA and compiled by the US Meat Export Federation (USMEF).

At the same time, the value of beef exports for the quarter rose four per cent (to $1.25 billion) on 10 per cent lower volumes (266,388 metric tons).

March pork export volume of 198,972 metric tons was eight per cent lower than a year ago, but up six per cent from February 2012. Export value of $570.5 million was three per cent higher than last year and up 8 per cent from the previous month. These results were led by excellent growth in the China/Hong Kong region and by strong performance in Mexico, Japan and Canada.

Beef export volume in March of 89,803 metric tons was 23 per cent lower than last year but up three per cent from February. March export value of $438.5 million was down eight per cent year-over-year but was seven per cent higher than the previous month.

“A 20 per cent increase in pork export value for the first quarter is extraordinary, especially considering the record performance of last year,” said USMEF President and CEO Philip Seng.

“On the beef side, market access issues and price sensitivity are making volume growth difficult in some markets, but we are pleased to see export value remaining above last year’s record pace, even on smaller volumes.”

Pork export value per head sets new monthly record

March pork export value was particularly strong on a per-head-slaughtered basis, reaching $59.92. This was nearly $4 higher than a year ago and set a new monthly record, surpassing the previous high of $59.53 set in November 2011. Exports equated to 27.8 per cent of total US production of muscle cuts plus variety meat, and 24 per cent when including muscle cuts only.

Mexico remains the leading market for US pork on a volume basis, with first quarter exports up 17 per cent in both volume (162,721 metric tons) and value ($299.7 million). Exports to Japan, which nearly reached the $2 billion mark in 2011, were up just one per cent in volume (122,899 metric tons) but also achieved a 17 per cent increase in value to $530.6 million. Exports to the China Hong/Kong region, which came on very strong in the second half of 2011, were 30 per cent higher in volume in the first quarter (115,642 metric tons) and surged 82 per cent in value to $234.9 million.

Other first quarter market highlights included:

  • Exports to Canada were up 26 per cent in volume (55,916 metric tons) and were one-third higher in value at just under $200 million.

  • In Russia, where US pork now has better potential for expansion under a global tariff rate quota, exports were up 20 per cent in volume (15,510 metric tons) and 36 per cent in value ($47.9 million).

  • Led by a strong performance in Colombia, exports to the Central and South America region expanded 9 per cent in volume (20,603 metric tons) and 16 per cent in value ($53.5 million).

In South Korea, pork exports surged in the early months of 2011 because of culling of the domestic swine herd (due to foot-and-mouth disease) and a temporary duty-free tariff rate quota for some cuts of imported pork.

Consequently, year-over-year exports to Korea were lower in the first quarter of 2012 – down 27 per cent in volume (53,590 metric tons) and 12 per cent in value ($154 million).

It is important to note, however, that these totals were still more than double the volume and triple the value recorded in the first quarter of 2010.

“While domestic supplies are recovering in Korea, we are still creating new opportunities for US pork.” Mr Seng said.

“The lower tariffs made possible by the Korea-US FTA will enhance the competitiveness of US pork in terms of price, and help us further expand the presence of chilled pork and value-added pork products in the retail and foodservice sectors. These marketing strategies have proven very effective in Japan, and I believe we can have similar success across north Asia.”

While beef export volume slows in some markets, value remains solid

March beef export value equated to $204.65 per fed steer and heifer slaughtered, down slightly from the March 2011 total of $205.40. Beef exports accounted for 12 per cent of total US production when including both muscle cuts and variety meat, and 9 per cent for muscle cuts only. These ratios were lower than a year ago (15 per cent and 11 per cent, respectively).

Despite a 13 per cent decline in volume, Mexico remained the leading destination for US beef (55,725 metric tons) and exports to Mexico managed a five per cent increase in value to $250.9 million. Export volume to Canada was steady with last year at 36,834 metric tons, but 15 per cent higher in value at $215.4 million.

In Japan, where the Food Safety Commission continues to examine BSE-related age and product restrictions on US beef, exports were down 7 per cent in volume (29,695 metric tons) but up 10 per cent in value ($194 million). The United States continues to gain market share, as Australia’s exports to Japan have fallen 14 per cent in 2012.

Other first quarter market highlights included:

  • Exports to Russia reflected a shift toward higher-value muscle cuts, as volume increased 4 per cent to 14,463 metric tons but volume surged 85 per cent to $59.9 million. As with pork, US beef faces a more favorable access situation in Russia as the US tariff rate quota for muscle cuts was expanded from 41,700 metric tons in 2011 to 60,000 metric tons this year.

  • While exports to some Middle East markets slowed, Egypt continued to post very strong results – increasing 12 per cent in volume (31,466 metric tons) and 18 per cent in value ($47.7 million). As a result, exports to the Middle East region were up slightly in volume (35,480 metric tons) and 10 per cent in value ($78.9 million).

  • Led by outstanding results in Chile, exports to the Central and South America region increased 44 per cent in volume (8,383 metric tons) and 94 per cent in value ($32.5 million). Exports to Peru and Guatemala also posted impressive value growth.

Market access issues took a toll on US beef exports to Taiwan (down 18 per cent in volume to 5,554 metric tons and 11 per cent in value to $35.1 million), where controversy over ractopamine residue testing has made for a very unsteady business climate.

Drastically lower import quotas have lowered US beef exports to Indonesia, where volume (601 metric tons) was down 86 per cent and value ($2.4 million) was down more than 60 per cent. (Though not reflected in these results, Indonesia also imposed new market access restrictions as a result of the BSE case announced April 24.) Year-over-year exports were also lower for Korea, but this was largely due to a surge in export activity in early 2011.

First-quarter performance in Korea was fairly consistent with the second half of 2011. US beef has also continued to gain market share in Korea this year, as Australia’s exports have declined by 37 per cent.

“Despite a decline in export volume, prospects for US beef remain positive across the globe,” Mr Seng said.

“We are, for the most part, encouraged by the response to the recent BSE case. Nearly every trading partner followed established science and did not alter our level of market access. We remain hopeful that Japan will open to a wider range of products later this year and that access issues in other Asian markets will also be addressed. Consumer demand for US beef is solid, but we need to eliminate trade barriers and maintain an active presence in these markets in the face of aggressive competition if we want to keep export value strong and get back to the record volume pace established in 2011.”

Lamb export value up slightly despite slump in volume

Lower exports to the Caribbean and a sluggish market for variety meat held back the first quarter performance of US lamb. Export volume was down 18 per cent to 3,295 metric tons, while value increased slightly to $6.4 million. Led by strong exports to Canada, lamb muscle cuts achieved a 12 per cent increase in value ($4.4 million) despite a 9 per cent decline in volume (1,484 metric tons).

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