Nalivka: Balance Is Key To Market


John Nalivka, Drovers

April 8, 2019


Beef markets continue to perform well.  Demand, supported by strong U.S. export sales as well as U.S. consumer purchasing has been well balanced with beef supplies as we head into the 2nd quarter and Easter.  That balance is key to the market outlook for the remainder of the year.


Demand is simply not as easy to quantify and instead, the discussion often becomes more anecdotal lacking the same information we have concerning supply herd size, cattle on feed inventories, slaughter, cold storage, carcass weights, production, etc.  But, from the demand side, U.S. beef exports - which are key to beef markets - were up 10% in 2018 from the prior year while U.S. beef imports were unchanged.  During January of this year, U.S. exports continued to perform in spite of higher prices and a strong dollar posting a 2% gain over the prior year.


While China has been on the radar as a key market for U.S. beef, Japan, South Korea, Mexico, Canada, and Hong Kong are still our most important trading partners accounting for 82% of total U.S. beef exports.  In 2018, Japan accounted for 28% of U.S. beef export volume with South Korea at 20% and Mexico at 14%.  At the same time, only 1% of U.S. beef exports went to China.


In addition to beef exports, the pork industry is increasingly encouraged by the opportunity to ship sharply more pork to China as the Chinese are significantly impacted by Asian Swine Flu and estimated losses in pork production ranging as high as 20%.  In 2018, sales to China represented 6% of total U.S. pork export volume and indications are that figure could double in 2019.   As with beef, Japan is the largest importer of U.S. pork accounting for 30%.


Regarding supply...