Record Export Levels Continue Through September

Pork, Beef Maintain Blistering Pace

By Erin Daley, USMEF Economist

Source: USMEF
Nov 14, 2008

While economic caution flags are flying as we enter the final quarter of 2008, both U.S. beef and pork export levels continued to exceed expectations through the first nine months of the year.

U.S. pork exports built on the record set in August, skyrocketing 61 percent in September over totals from a year ago. U.S. pork and variety meat exports for the month totaled 163,055 metric tons (just shy of 360 million pounds) valued at $425.5 million. Year-to-date, pork exports are up 70 percent in volume versus 2007 to 1.5 million metric tons (3.4 billion pounds) valued at $3.6 billion – a 64 percent increase.

Beef plus variety meat exports also maintained their strength through September with monthly exports up 47 percent to 98,640 metric tons (217.5 million pounds) valued at $396 million. For the first nine months of 2008, beef export volume increased 33 percent to 750,916 metric tons (1.65 billion pounds) valued at nearly $2.8 billion, a 45 percent jump.

The January through September beef export totals for 2008 stand at 95 percent of 2003 levels for value and 77 percent of 2003 volume totals. However, September 2008 exports exceeded those of September 2003 by 18 percent in value.

Currency fluctuations and credit issues are affecting the flow of world meat trade, and we will see exports impacted in the final quarter of the year. However, as markets stabilize, demand for U.S. pork and beef should remain strong.

Japan leads pork markets

Japan, Mexico, Russia and Hong Kong/China were the leading markets for pork exports in September, although Canada set a new monthly record and South Korea continues to grow as a market for U.S. pork.

Japan is now the top market in volume and value for the year at 335,671 metric tons (740 million pounds) valued at $1.1 billion, increases of 26 and 32 percent, respectively. Exports in September were 38 percent higher than last year, totaling 36,394 metric tons (80.2 million pounds).

Mexico was the second-largest destination for U.S. pork in September with exports totaling 29,575 metric tons (65.2 million pounds), up 43 percent from a year ago and putting the January through September total at 267,230 metric tons (589.1 million pounds – a 36 percent hike) valued at $474.5 million, a 48 percent increase. Exports to Mexico peaked in July at 38,973 metric tons (85.9 million pounds), but still remain well above year-ago levels.

The Hong Kong/China region continued to be the second-largest destination measured in volume for U.S. pork through the first nine months of 2008, with exports up 214 percent to 330,601 metric tons (728.8 million pounds) valued at $572 million, a 268 percent jump. After peaking in May and June, export volumes were lower in July and August but rebounded slightly during September to close 33 percent above last year, totaling 22,698 metric tons (50 million pounds), with the bulk of the product going to Hong Kong. The slowdown in exports to China (especially muscle cuts) was anticipated as Chinese pork production is recovering and prices have declined significantly from the peak levels seen early in the year.

Russia ranked third among U.S. pork markets in September with exports totaling 27,157 metric tons (59.9 million pounds), near the record of 28,000 metric tons (61.7 million pounds) set the prior month. For the 2008 calendar year, U.S. pork exports to Russia stand at 168,603 metric tons (371.7 million pounds) valued at $365 million, increases of 185 and 194 percent, respectively.

Muscle cut exports to Russia thus far total 122,268 metric tons (269.5 million pounds), 2.5 times the U.S. quota of 49,800 metric tons (109.8 million pounds), meaning most pork exports were paying the 60 percent over-quota duty instead of the 15 percent in-quota rate. In other words, U.S. pork exports filled the quota in the first four months of the year. After that, the 60 percent duties would equate to more than $107 million!

September pork exports to Canada set a new record at 15,882 metric tons (35 million pounds), narrowly surpassing the 15,853 metric tons exported during July and up 9 percent from a year ago. For 2008, exports volumes are up 21 percent to 125,917 metric tons (277.6 million pounds) valued at $416 million, a 19 percent hike.

Weekly Canadian live hog exports to the United States remain well below year-ago levels, with exports of all live hogs down 4 percent from January through Nov. 8 compared to the same period last year – totaling just over 8 million head. The latest Canadian inventory report showed the breeding herd down 8.3 percent in October. Therefore the trend for lower live hog exports (not to mention the COOL impact) and lower Canadian pork production is expected to continue in 2009.

U.S. pork exports to South Korea remain strong, with September exports at 9,362 metric tons (20.6 million pounds) – more than double export volumes from a year ago. Exports to Korea peaked in April at 13,280 metric tons (29.3 million pounds), but remain well above year-ago levels, with January through September exports up 51 percent to 101,998 metric tons (224.9 million pounds) valued at $215 million, a solid 32 percent increase.

The ASEAN region continues to be a growth market for U.S. pork, with September exports more than double last year at 3,242 metric tons (7.1 million pounds). Exports to the ASEAN region peaked in June at 8,780 metric tons (19.4 million pounds), but for 2008, volumes are up 393 percent to 46,979 metric tons (103.6 million pounds). Of that total, Philippines’ imports are up 246 percent to 22,296 metric tons (49.2 million pounds), Vietnam accounts for 16,361 metric tons (36.1 million pounds – a 1,361 percent jump) and Singapore has imported 7,982 metric tons (17.6 million pounds – a 382 percent increase. Exports to Vietnam have slowed from their record-breaking pace in the April-July period, likely due to lower pork prices in the Greater China region.

Exports to Australia and New Zealand remained strong in September, up 35 percent from last year to 3,064 metric tons (6.7 million pounds) for a year-to-date total of 34,957 metric tons (77.1 million pounds) valued at $98 million, increases of 24 and 14 percent, respectively. Exports to the region peaked in June at 6,000 metric tons (13.2 million pounds).

Exports to the European Union also remain strong at 3,422 metric tons (7.5 million pounds) for September, up 122 percent from last year, putting 2008 totals at 34,567 metric tons (76.2 million pounds) valued at $98 million, up 149 and 143 percent, respectively. USMEF cautions that EU import data should be utilized to measure exports to the EU, as U.S. data indicates U.S. exports would essentially exceed available import licenses (and thus be paying the prohibitive over-quota duties). EU import data shows 16,951 metric tons (37.4 million pounds) imported from the United States in the January through August period, an increase of 167 percent. Chile is the other primary supplier, with imports totaling 10,228 metric tons (22.5 million pounds), up 34 percent.

Another positive region for U.S. pork is Central and South America, with September volume at 3,313 metric tons (7.3 million pounds), up 50 percent from last year. For 2008, pork exports to the region are up 17 percent to 27,109 metric tons (59.8 million pounds). Honduras, Colombia and Guatemala are the top markets.

U.S. pork exports to Taiwan peaked in August at 4,763 metric tons (10.5 million pounds), but September’s volume of 2,503 metric tons (5.5 million pounds) was 218 percent larger than last year and the year-to-date total is up 70 percent to 23,545 metric tons (51.9 million pounds).

September pork exports to the Caribbean remained strong at 3,000 metric tons (6.6 million pounds), nearly double last year. For calendar year 2008, exports are up 50 percent to 23,062 metric tons (50.8 million pounds). These volumes include the Dominican Republic, which accounts for 10,085 metric tons (22.2 million pounds), a 164 percent jump. Trinidad and Tobago and the Bahamas are the largest Caribbean markets.

Mexico tops beef markets

Exports to Mexico, the largest U.S. beef market, were up 23 percent in September to 33,409 metric tons (73.6 million pounds) valued at $131.5 million, putting the 2008 volume total up 19 percent over 2007 to 313,144 metric tons (690.4 million pounds) valued at $1.1 billion, a 27 percent increase. Beef and variety meat exports to Mexico peaked in July at 40,930 metric tons (90.2 million pounds – the current record for monthly exports to Mexico). Feeder cattle imports from Mexico are down 43 percent (totaling 496,694 head through Nov. 11) and there is much concern regarding the impact of COOL on Mexican feeder cattle values.

Exports to Canada peaked in May (the latest record at 18,056 metric ton or 39.8 million pounds) but remained 8 percent above year-ago levels in September with exports totaling 12,731 metric tons (28.1 million pounds). January through September exports are up 31 percent to 122,448 metric tons (269.9 million pounds) valued at $574.4 million, up 35 percent. Like Mexico, live cattle trade with Canada has slowed significantly with similar concerns about COOL implications. Year-to-date imports of Canadian cattle are still up 10 percent from last year, with larger slaughter cow and feeder cattle numbers more than offsetting the 21 percent decline in slaughter steer and heifer imports (total: 1.26 million head, of which 167,000 head are slaughter cows and bulls).

Exports to Japan continue to slow from the June peak of 10,146 metric tons (22.4 million pounds), reflecting tighter supplies of cattle under 21 months of age. However, exports in September exceeded last year by 46 percent at 6,230 metric tons (13.7 million pounds) as USMEF continues to promote alternative cuts. Year-to-date volume and value for beef exports to Japan have each increased 62 percent to 57,509 metric tons (126.8 million pounds) valued at $297.2 million. Beef exports to Japan thus far in 2008 equal just 20 percent of 2003 export volume and 29 percent of value. In other words, $736 million in lost opportunity based on January through September 2003 export totals.

Increased buying pressure from Russia further slowed exports to the Middle East in September. While 2008 volume is down 4 percent to 68,672 metric tons (151.4 million pounds), the value of those exports has increased 36 percent to $109 million versus 2007.

Exports to the ASEAN region set another new record in September at 5,706 metric tons (12.6 million pounds) valued at $20 million. This puts January through September volume up 350 percent to 39,720 metric tons (87.6 million pounds) valued at $116.9 million, a 389 percent jump in value. Vietnam leads the region with exports up 495 percent to 29,621 metric tons (65.3 million pounds), followed by the Philippines at 7,223 metric tons (15.9 million pounds – a 180 percent jump) and Indonesia at 1,946 metric tons or 4.3 million pounds, up from virtually zero last year due to market access issues. The continued strength in exports to Vietnam symbolizes the strong demand in the Greater China region and underlines the frustration that the United States still does not have direct access to China for U.S. beef.

Exports to Russia were strong in September at 7,786 metric tons (17.2 million pounds). Of this, 2,038 metric tons (4.5 million pounds) were muscle cuts. Variety meat exports remain strong, while muscle cut exports seem to have peaked in August. Weekly beef export sales data indicates accumulated exports through Nov. 6 at 16,774 metric tons (nearly 37 million pounds), but weekly sales have slowed dramatically since the peak at the end of August.

South Korea continues comeback

Not including variety meat, South Korea was the second-largest destination for U.S. beef exports during September, with exports totaling 16,642 metric tons (36.7 million pounds) valued at $89 million. This volume exceeded exports in September 2003 which totaled 13,431 metric tons (29.6 million pounds). Since beef and beef variety meat exports resumed in mid-July, they have totaled 31,385 metric tons (69.2 million pounds) valued at $162 million. Weekly beef export sales data through Nov. 6 indicates accumulated exports of 45,000 metric tons (99.2 million pounds), with outstanding sales of 16,000 metric tons (35.3 million pounds).

Exports to Taiwan declined dramatically in September to 1,816 metric tons (4 million pounds), down from the peak of 2,856 metric tons (6.3 million pounds) in August, but remained 8 percent above last year’s volume. Total 2008 exports to Taiwan are up 35 percent to 21,204 metric tons (46.7 million pounds) valued at $99 million and are on track to set another record this year.

Exports to the EU continued to climb in September, with volume (excluding variety meat) up 118 percent to 1,745 metric tons (3.8 million pounds) valued at $9.2 million. Year-to-date exports are up 137 percent to 12,687 metric tons (nearly 28 million pounds) valued at $74.9 million, an increase of 175 percent. Again, USMEF cautions that EU import data should be utilized for a more precise estimate of exports of High Quality Beef (HQB) to the EU (under the 11,500 metric ton quota which runs July-June). EU import data show a 160 percent increase in imports from the United States, totaling 2,670 metric tons (5.9 million pounds) in the January through August period. At this pace, the United States will not fill the HQB quota during the current quota year — contrary to the large volumes shown in U.S. export data.

U.S. beef exports to the Caribbean are down 2 percent in volume but up 12 percent in value at 13,538 metric tons (29.8 million pounds) and $54.6 million for the first nine months of 2008. Exports to Jamaica are up 23 percent to 4,097 metric tons (9 million pounds) while exports to the Bahamas are down 19 percent to 2,131 metric tons (4.7 million pounds) and exports to the Dominican Republic are down 9 percent to 1,996 metric tons (4.4 million pounds).

Exports to Central and South America during the January through September period are up 26 percent to 8,390 metric tons (18.5 million pounds), and up 54 percent in value to $18.6 billion. Peru is the leading market with exports up 76 percent to 4,076 metric tons (nearly 9 million pounds), mainly livers. Exports to Guatemala are down 4 percent to 1,384 metric tons (3.1 million pounds) and exports to Costa Rica are down 30 percent to 606 metric tons (1.3 million pounds).

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