T-bone steaks on the grill

T-Bone steaks on the grill at the Montana Stockgrowers Association’s 2016 T-Bone Classic annual event, an opportunity to foster new partnerships between Montana’s ranching community and other businesses/industries essential to Montana's economy. The Chinese middle class is growing, wants more beef, and is estimated to be larger than the total U.S. population. The proposed Chinese tariffs on U.S. beef could hamper the efforts of Montana and all cattle-producing states in the nation by making it more difficult to get American beef to the roughly 1.38 billion Chinese consumers.

November exports of U.S. beef were below the previous year’s large totals. U.S. pork exports posted the best month on record in November, easily reaching new highs in both volume and value, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

November beef exports totaled 108,662 metric tons (mt), down 4 percent from a year ago, valued at $658.1 million (down 7 percent). For January through November, beef exports trailed 2018’s record pace by 3 percent in both volume (1.21 million mt) and value ($7.4 billion). However, 2019 is already the second-highest year for beef export value, trailing only the 2018 record of $8.33 billion.

Beef export value per head of fed slaughter was $307.55 in November, down 15 percent from a year ago. Through November, per-head export value averaged $308.74, down 4 percent. November exports accounted for 13.7 percent of total beef production and 11 percent for muscle cuts only, down from 14.1 percent and 11.8 percent, respectively, a year ago. For January through November, exports accounted for 14.1 percent of total beef production and 11.4 percent for muscle cuts, down from 14.5 percent and 12 percent, respectively, a year ago.

Pork exports surged to 259,812 mt in November, up 26 percent year over year and 11 percent above the previous high set in July 2019. Export value was $712.7 million, up 32 percent from a year ago and breaking the previous record (also from July 2019) by 14 percent. These results pushed January-November exports 7 percent above the previous year’s pace in volume (2.39 million mt) and 6 percent higher in value ($6.19 billion). Pork exports are now on pace to exceed previous records for both volume (2.45 million mt in 2017) and value ($6.65 billion in 2014).

Pork export value per head slaughtered was $62.90 in November, up 29 percent from a year ago and the highest in five years. Through the first 11 months of 2019, per-head value averaged $52.24, up 2 percent year over year. November exports accounted for 29.7 percent of total pork production and 26.8 percent for muscle cuts only, up substantially from a year ago (24.5 percent and 22 percent, respectively). For January through November, exports accounted for 26.4 percent of total pork production and 23 percent for muscle cuts, up from 22.4 percent and 25.7 percent, respectively, a year ago.

Beef exports headed for new records

Although November beef exports to South Korea were lower than a year ago in volume (19,116 mt, down 5 percent) and value ($139 million, down 11 percent), the market remained on pace to break the 2018 records. Through November, exports to Korea were up 6 percent in both volume (234,310 mt) and value ($1.69 billion). U.S. share of Korea’s chilled beef imports reached 62 percent, up from 58 percent in 2018. U.S. beef accounted for 51 percent of Korea’s total beef and beef variety meat imports and more than one-third of Korea’s total beef consumption.

Beef exports to Taiwan will be record-large for the fourth consecutive year in 2019. November exports were 4,869 mt (up 8 percent from a year ago) valued at $43 million (up 7 percent). This pushed January-November results 8 percent ahead of the previous year’s pace at 57,837 mt, valued at $513.3 million (up 4 percent).

The gains in Korea and Taiwan have been offset by a decline in Japan, which is still the largest destination for U.S. beef exports but one in which the U.S. industry has faced a steep tariff rate disadvantage compared to imports from Australia, New Zealand, Canada and Mexico. Through November, exports to Japan were down 6 percent from a year ago in volume (287,090 mt) and dropped 7 percent in value ($1.8 billion). But on Jan. 1, U.S. beef gained tariff relief in Japan that brings rates in line with key competitors, so the outlook is very positive for 2020.

“The Japanese market performed extremely well for U.S. beef in 2018, even though we were already facing a tariff rate disadvantage versus Australia,” USMEF President and CEO Dan Halstrom explained. “More competitors saw tariff rate cuts in 2019 under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which further tilted the playing field against U.S. beef. For example, Canada’s beef exports to Japan increased 57 percent last year. So the rate cuts Japan recently implemented for U.S. beef are long overdue, and USMEF is working aggressively with U.S. exporters and the Japanese trade to capitalize.”

January-November highlights for U.S. beef exports include:

• In Mexico, the third-largest market for U.S. beef behind Japan and Korea, exports increased 4 percent from a year ago in value to just over $1 billion despite a 2 percent decline in volume (214,963 mt). This was largely due to a strong value increase for tripe, one of the top U.S. beef variety meat export items to Mexico. Variety meat exports were up 2 percent year over year in volume (89,667 mt) but jumped an impressive 18 percent in value to $244.5 million. This included $88 million in tripe exports, up 28 percent;

• Led by strong demand in Indonesia and steady growth in the Philippines, beef exports to the ASEAN region increased 23 percent from a year ago in volume (55,583 mt) and were 7 percent higher in value ($270.6 million);

• Exports to the Dominican Republic already surpassed the 2018 record, increasing 24 percent in volume to 7,523 mt valued at $61.4 million (up 19 percent);

• In Central America, strong demand in Guatemala and Panama helped push exports 4 percent higher than a year ago in volume (14,044 mt) and 9 percent higher in value ($79.9 million). Export value to Guatemala and Panama jumped 9 percent and 25 percent, respectively; and

• Mexico and Japan have led a very strong year for global exports of U.S. beef variety meat, which were up 4 percent from a year ago in volume (295,527 mt) and 9 percent higher in value ($885.9 million). Exports to Japan, which largely consist of tongues and skirts, were up 20 percent from a year ago to 58,278 mt, valued at $355.5 million (up 13 percent). Egypt, the largest destination for U.S. beef livers, saw a 4 percent increase in volume (59,203 mt) while export value climbed 17 percent to $69 million. Led by strong demand in Indonesia, variety meat exports to the ASEAN increased 39 percent in volume (16,595 mt) and 43 percent in value ($37.3 million). Strong growth in the Dominican Republic and Trinidad and Tobago pushed variety meat exports to the Caribbean 17 percent higher in volume (6,814 mt) while value surged 61 percent to $14.2 million.

November lamb exports trend lower

November exports of U.S. lamb were 1,253 mt, down 10 percent from a year ago, while value also dipped 10 percent to $2.19 million. Through the first 11 months of 2019, lamb exports remained well ahead of the previous year’s pace in volume (14,507 mt, up 23 percent) and value ($23.7 million, up 11 percent). Led by strong demand in Mexico, lamb export volume is the largest since 2011 and export value is set to exceed $25 million for the first time since 2014. In addition to Mexico, growth markets in 2019 included Trinidad and Tobago, Panama, Guatemala and the Philippines.

Pork surge to China/Hong Kong continues

Demand from China/Hong Kong continued to drive U.S. pork export growth in November, with volume climbing to 86,213 mt—up 284 percent from a year ago—valued at $204.9 million (up 240 percent). For January through November, exports to the region were up 71 percent to 554,789 mt, valued at $1.18 billion (up 49 percent).

Although November pork export volume to Mexico was lower than a year ago at 57,537 mt (down 6 percent), export value surged 28 percent to $124.3 million, the highest since July. For January through November, exports to Mexico were down 11 percent from a year ago in volume (641,952 mt) and 6 percent lower in value $1.14 billion. Competition from Canadian pork was especially strong in the Mexican market while Canada was suspended from China (late June to early November). From January through November, Canada’s exports to Mexico increased 8 percent from a year ago to 128,100 mt, valued at $185 million (up 14 percent).

“While the surge in pork shipments to China will capture most of the headlines this month, it is equally encouraging to see export value to Mexico make such a strong recovery,” Halstrom said. “Getting exports to Mexico back to the record levels of 2017 and early 2018 is a top priority for the U.S. pork industry, because demand from Mexico is such an important driver of profitability for everyone in the supply chain. The same is true in Japan, so it’s very important to reclaim lost share in these longtime mainstay markets. “

November exports to Japan trailed the previous year by 3 percent at 32,594 mt, while value was down 1 percent to $136.5 million. Through the first 11 months of the year, exports to Japan were down 6 percent from a year ago in volume (340,568 mt) and 7 percent lower in value ($1.4 billion). Japanese import data show imports of U.S. pork decreased by $121 million with much of the decline being in ground seasoned pork, which fell by $73 million due to the wide tariff rate discrepancy. Beginning Jan. 1, Japan’s tariff rates on U.S. pork and pork products were lowered to match those imposed on European, Canadian and Mexican pork, eliminating a significant price disadvantage that slowed U.S. exports in 2019. The rate for U.S. ground seasoned pork fell from 20 to 13.3 percent.

January-November highlights for U.S. pork exports include:

•  Exports to Colombia rebounded in November to pull 9 percent ahead of the previous year’s pace in volume (92,280 mt) and 7 percent higher in value ($203.6 million). Also bolstered by strong growth in Chile and Peru, exports to South America already surpassed previous full-year records in both volume (141,657 mt, up 18 percent year over year) and value ($356.2 million, up 22 percent);

•  Led by strong growth in Panama, Guatemala, Honduras and Costa Rica, exports to Central America also set new annual records for volume (86,794 mt, up 16 percent) and value ($211.8 million, up 20 percent);

•  Surging demand in Australia and New Zealand pushed exports to Oceania to new heights. Exports to the region jumped 36 percent from a year ago in both volume (105,399 mt) and value ($304.5 million); and

•  Exports to Canada increased 6 percent from a year ago in both volume (197,847 mt) and value ($738.2 million). — USMEF

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