A little momentum can go a long way, until it doesn't. And for May both beef and pork exports slipped below year-ago levels according to data released by USDA and compiled by the U.S. Meat Export Federation.
Beef exports moved counter-seasonally lower in May, dropping 14% from a year ago to 88,466 metric tons (mt) - a metric ton is about 2,205 pounds. Export value dipped lower year-over-year for the first time since January, reaching only $556.7 million - a 6% drop. For January through May, exports totaled 430,393 mt down 10% from the same period in 2014. Value for the period remained ahead of last year's pace at $2.68 billion (up 2%).
During the January-May period, beef exports accounted for about 13% of total beef production nd 10% for muscle cuts only. That's down 14% and 10.6% respectively, last year. Export value per had of fed slaughter averaged $291.70, which is up 9% from a year ago.
Korea is a U.S. beef hotspot
South Korea continues as a strong buyer with exports increasing 5% from a year ago in volume - hitting 9,740 mt; and 11% in value at $64.8 million. This raises January to May exports to Korea 4% in volume and 9% higher in value. However the market could see a short-term slowdown due to the toll the recent outbreak of Middle East respiratory syndrome has taken on consumer spending in Korea. MERS was first diagnosed in Korea on May 20, but became a major health concern in June.
Comments Phil Seng, USMEF president and ceo: "Although MERS is not a food safety issue, its impact on Korea's restaurant sector was dramatic in June. Fortunately our staff in Korea reports that the situation has improved significantly this month, with consumer activity beginning to return to normal. We expect beef demand in the Korean market - which is one of our strongest performers in 2015 - to rebound fairly quickly."
USMEF also points to another bullish factor in Korea with domestic beef priced soaring the near-term highs in June, signaling relatively tight supplies.
Meanwhile, other Asian markets have been mixed so far in 2015 with most struggling to keep pace with last year's import volumes. Exports to Japan slumped in May, dropping 10% from a year ago in volume, and 15% in value. Through May exports to Japan remained modestly higher than a year ago, up 2% with value up 3%.
Other January-May results included:
* Hong Kong exports down 17% in volume and 8% in value
* Taiwan export value up 13% even as volume slipped 5%
* Exports to the ASEAN region fell 23% in volume, but export value rose 14%. Major destinations performed well, with exports exceeding year-ago levels to the Philippines, Vietnam and Singapore. The lead cause of the drop was a major decrease to Indonesia - down 85% - driven by restrictive import regulations and a severely weakened currency, USMEF reports.
Seng warns that the U.S. beef industry faces a volatile business climate: "Lack of access to China, which never reopened after the 2003 BSE case, is definitely holding back our export growth. China is a burgeoning market that impacts prices and product flow throughout a large region, and its influence on global beef trade is growing rapidly."
Seng says exporting to China would "significantly expand" the presence of U.S. beef in Asia. Just four years ago, China's beef imports (from other suppliers) totaled only $112 million for an entire calendar year. Through May 2015, imports exceeded $700 million, up 17% from the record pace of 2014. Primary suppliers for that growing Chinese market? Australia, Uruguay, New Zealand and Argentina.
Pork exports totaled 184,865 mt in May, down 2% from a year ago, while value slipped 18% to $489.2 million. Through the first five months of 2015, pork exports were down 6% in volume (910,967 mt) and 15% in value ($2.42 billion) from the same period last year.
January-May pork exports equated to 25% of total production and 21% for muscle cuts only – down from 28% and 23%, respectively, a year ago. Pork export value per head slaughtered averaged $51.39, down 19% from the first five months of 2014.
After a solid April performance pork exports to Japan and Mexico stepped back in May. Export volume to Japan dipped 9% from a year ago, while value was down 18%. Through the first five months of this year, exports to Japan were off 11% in volume and 18% in value.
May exports to Mexico were the lowest in 19 months, down 6% from a year ago. Export value fell by nearly one-thrid to $95.1 million. For January through May, exports to Mexico remained 5% ahead of last year's pace, but down 17% in value.
Here's a look at other January-May results for U.S. pork:
* Exports to Korea cooled slightly in May but remain on a very strong pace, with volume up 38 percent to 95,686 mt and value up 37 percent to $285.1 million. Pork demand also took a short-term hit due to MERS, but should be strong in coming months as domestic production is taking longer than expected to recover from the impact of recent outbreaks of PEDV and FMD. Korea’s domestic pork carcass prices edged slightly lower June but still averaged $2.40 per pound – among the highest in the world.
* Growth to Honduras and Guatemala offset smaller volumes to Colombia, resulting in steady volume to Central/South America (51,257 mt). Export value was down 3 percent to $132.8 million. The outlook for this region looks positive as exports to Colombia gained momentum in May and shipments to Honduras and Guatemala have surged even higher in recent weeks.
* Limited access to China, which only a small number of U.S. pork plants are eligible to serve, continues to dampen exports to the China/Hong Kong region – a critical destination for selected pork and pork variety meat items, especially with China’s hog prices hitting multi-year highs. Export volume was down 21 percent from a year ago to 130,525 mt and value fell 26 percent to $273.6 million. The European Union is dominating the region’s imported pork market, accounting for nearly 70 percent of pork entering China/Hong Kong.
* Exports to the ASEAN region were down sharply, falling 51 percent in volume (16,200 mt) and 58 percent in value ($35.5 million) on lower shipments to the Philippines and Singapore.
Seng notes the influx of lower-priced European pork has reshaped the competitive landscape in Asia. "The European industry has aggressively targeted Japan and China, successfully capturing market share. But we're also seeing a significant impact in smaller markets such as Pakistan, Taiwan, Singapore and Australia and Korea continues to be a strong destination for European pork. While this surge was prompted by the closure of the Russian market, this is not a short-term phenomenon. There has been a significant transition in global pork trade patterns and we expect it to have a lasting impact."
Complete January-May export results are available on the USMEF statistics webpage.
Source: U.S. Meat Export Federation