Retaliatory duties in China and Mexico continue to challenge U.S. pork exports, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Pork muscle cut exports improved over last September’s volume, but were offset by sharply lower shipments of pork variety meat.
"Pork exports have held up relatively well, but unfortunately the obstacles U.S. pork faces in China and Mexico are putting a lot of pressure on export value," says Dan Halstrom, USMEF President and CEO.
September pork export volume was down 2% from a year ago to 179,423 mt, while export value fell 7% to $470.2 million. Pork muscle cuts were 2% higher than a year ago at 146,542 mt, but value still declined 3% to $397.6 million. September variety meat exports dropped significantly in both volume (32,881 mt, down 18%) and value ($72.6 million, down 21%). For January through September, combined pork and pork variety meat exports were 1% above last year’s record pace at 1.81 million mt and 2% higher in value at $4.79 billion. For pork muscle cuts only, exports increased 6% from a year ago in volume (1.46 million mt), valued at just under $4 billion (up 3%).
September exports accounted for 24.8% of total pork production, up from 23.6% a year ago. For muscle cuts only, the percentage exported was 21.8% – up two full percentage points from last September. For January through September, pork exports accounted for 26.1% of total production, down from 26.5% last year, but the percentage of muscle cuts exported increased from 22.1 to 22.7%. Export value per head slaughtered was down 1% from a year ago in September ($48.72) and for January through September ($52.46).
Despite a fourth straight month in which shipments were below last year’s level, exports to leading volume market Mexico remained 1% ahead of last year’s record pace at 589,235 mt. Export value, however, has felt intense pressure from Mexico’s retaliatory duties, dropping 8% to $1.01 billion. Canada’s January-September exports to Mexico were up 20% to 93,346 mt (valued at $126.5 million, up 25%). EU exports also surged to Mexico in July (1,809 mt, up 747%) and August (2,343 mt, up 733%) and are expected to continue gaining momentum as Spain, Denmark and Germany take advantage of Mexico’s recently implemented duty-free pork quota.
Halstrom says that the U.S.-Mexico-Canada Agreement (USMCA) proposal is a step in the right direction, but with 20% duties on U.S. pork going into Mexico, it’s urgent that the industry works closely with the U.S. government to get these duties rescinded as soon as possible.
Uncertainty Remains In China
From an accounting angle, Joel Haggard, USMEF senior vice president Asia Pacific, says pork numbers were pretty flat as a result of exports to China and Hong Kong dropping roughly 100,000 tons and not getting picked up in terms of increased buying by Korea, Columbia, Australia, Philippines, Vietnam, Taiwan, all adding up to more or less compensate for that huge decrease in China pork imports.
Exports to China/Hong Kong declined 26% from a year ago to 277,779 mt, with value dropping 14% to $667.9 million. This region is the largest destination for U.S. pork variety meat exports, which were down 27% in volume (177,747 mt) and 13% in value ($466.2 million).
“All of our competitors have faced a tough China market,” Haggard says. “China looks to get more interesting moving forward because of their African swine fever outbreaks. As of this morning, they’ve registered 54 cases. It seems to be spreading faster.”
The transport restrictions China has placed on hog movement due to ASF is causing some market dislocations because they are preventing the movement of live hogs and pork products from epidemic provinces to other provinces, Haggard says.
“This is creating panic selling in some provinces,” he adds. “We’re seeing some prices in certain epidemic-hit provinces that are now below breakevens. And that would suggest that beginning sometime next year, that they’ll be moving into a production contraction situation.”
The official cull numbers China has announced are still pretty low, but Haggard believes the low prices in some of the hard-hit provinces will discourage production.
“The ASF outbreak is something we are watching very carefully,” he says. “There’s a degree of normalcy in the market so far. National prices are still above breakeven. But it seems to be see-sawing back and forth as if the market itself is trying to figure out a direction.”
Korea’s “Meat Boom” Provides Opportunity For U.S. Pork
Jihae Yang, USMEF-Korea director, says the Korean market is experiencing a “meat boom.” The consumption of red meat in Korea has been growing as well as the demand for convenience products and premium pork such as Berkshire or Duroc.
“The volume is still limited, but it’s a sign of the market diversification and the upgraded customer demand,” says Jihae Yang, USMEF-Korea director.
September pork exports to South Korea increased 33% from a year ago in volume (12,486 mt) and 30% in value ($33.6 million). Through September, exports increased 43% in volume (172,022 mt) while export value climbed 48% to $489.2 million – already topping the 2017 year-end total of $475 million. U.S. share of Korea’s total pork imports has increased dramatically this year, from 31 to 35%, even as imports also trended higher from most of Korea’s main suppliers.
Pork exports to South America continued to gain momentum in September, led by strong growth in Colombia and Peru and a rebound in exports to Chile. Through the first three quarters of the year, exports to the region were 27% ahead of last year’s record pace in volume (92,252 mt) and 22% higher in value ($227.9 million).
With steady growth in mainstay markets Honduras and Guatemala and sharply higher shipments to Panama, El Salvador, Nicaragua and Costa Rica, January-September exports to Central America increased 20% in volume (58,756 mt) and 17% in value ($138.7 million). This region is also coming off a record year in 2017.
Exports to the Dominican Republic have already broken the records set last year, with volume climbing 35% to 32,859 mt, valued at $71.6 million (up 29%).
For more information on January-September export results for U.S. pork, visit USMEF’s statistics web page.