Cattle and beef markets are not independent from global markets

Total U.S. red meat and poultry production is expected to increase in 2018. Recent tariff wars could have an impact as any slowdown in meat exports will add pressure to domestic meat prices.

February exports of U.S. beef remained below the rapid pace established in early 2020, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). However, exports were consistent with USMEF’s February projections and the federation still expects 2021 beef exports to increase substantially year-over-year.

Beef exports totaled 103,493 metric tons (mt) in February, down 8 percent from a year ago, valued at $669.5 million (down 2 percent). This was due mainly to a decline in variety meat exports, as beef muscle cuts were steady with last year in value at $597.9 million on a volume of 82,530 mt (down 3 percent). Through February, beef exports were 5 percent below last year’s pace at 208,540 mt, valued at $1.32 billion (down 2 percent). Beef muscle cut exports were down 1 percent to 163,928 mt and steady in value at $1.18 billion. ​

“While February exports were in line with expectations, the results don’t fully reflect global demand for U.S. red meat,” said Dan Halstrom, USMEF president and CEO. “Logistical challenges, including congestion at some U.S. ports, are still a significant headwind and tight labor supplies at the plant level continue to impact export volumes for certain products—including some variety meat items and labor-intensive muscle cuts.” ​

Halstrom noted that the flow of exports through U.S. ports is showing some gradual improvement as COVID-impacted crews move closer to full strength, but remains a serious concern for the U.S. agricultural sector. ​

“USMEF greatly appreciates the members of Congress and ag industry representatives who have worked to bring more attention to this situation and the efforts of maritime regulators to address shipping practices,” he said. ​

Export demand has remained solid despite logistical challenges and other pandemic-related obstacles. Continued international demand, along with robust domestic business, contributed to stronger cutout values in the first quarter, which were up an average of 4 percent for Choice beef ($224/cwt).

Strong momentum for exports

February beef exports equated to $345.37 per head of fed slaughter, up 1 percent from a year ago. The January-February average was $327.92, up 2 percent. February exports accounted for 14.4 percent of total beef production and 12.3 percent for muscle cuts, down from 15.3 percent and 12.4 percent, respectively, last year. The January-February ratios were 13.8 percent of total production (down from 14.1 percent) and 11.6 percent for muscle cuts (up slightly).

The surge in beef exports to China continued in February, reaching 8,644 mt valued at $66 million—far above the minimal levels posted a year ago and making it the fourth-largest destination for U.S. beef. Through February, exports were more than 1,000 percent above last year’s pace in both volume (16,506 mt) and value ($124.1 million). Beef exports to China already exceed the full-year totals reached in 2019, prior to the U.S. securing expanded beef access through the Phase One Economic and Trade Agreement.

February beef exports to South Korea were slightly above last year’s strong totals, pushing January-February exports to 44,892 mt, up 9 percent from a year ago, while a 10 percent increase in value ($328 million) established Korea as the value leader for U.S. beef exports in early 2021.

Korea surpassed perennial value leader Japan, where exports felt the impact of an annual import safeguard established in the U.S.-Japan Trade Agreement. While the higher safeguard tariff rate (38.5 percent) on beef muscle cuts was not triggered until mid-March, importers’ efforts to manage the safeguard likely impacted February shipments, which were 8 percent below last year at 24,879 mt, valued at $165.1 million (down 4 percent). Through February, beef exports to Japan were 10 percent below last year’s pace in volume (46,897 mt) and down 8 percent in value ($303.1 million).

Japan imposed a higher tariff rate on March 18. It remained in effect for 30 days, when the rate declined to 25 percent—the same rate that now applies to beef cuts imported from Japan’s other major suppliers. As prescribed in the trade agreement, trade officials from the U.S. and Japan have begun consultations on possible adjustments to the safeguard.

Other highlights

While beef exports to most Western Hemisphere markets have trended lower in 2021, demand has strengthened in Central America, continuing the strong rebound seen in the fourth quarter of 2020. Led by growth in Guatemala, Costa Rica, El Salvador, and Nicaragua, exports to the region climbed 8 percent from a year ago to 3,107 mt, valued at $18.7 million (up 14 percent).

Following a record performance last year, beef exports to Taiwan are struggling in early 2021. Through February, exports were down 24 percent from a year ago to 7,638 mt, with value slipping 15 percent to $73.4 million. But USMEF-Taiwan reports that demand is strong, with lower volumes more related to shipping delays and the availability of U.S. product. Taiwan still imported more chilled U.S. beef through February, with volume up 3 percent to 4,250 mt and accounting for 79 percent of Taiwan’s total chilled imports.

Beef exports to Mexico were also below last year’s pace, due in part to lower shipments of variety meat. Exports to Mexico trailed previous year by 19 percent in volume (33,734 mt) and 25 percent in value ($163.1 million). — USMEF

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