Red meat and poultry exports are expected to total about 10.7 billion pounds this year, unchanged from 2001. The increase in poultry exports will offset the decline in red meats. However, the recently announced ban on U.S. poultry exports by Russia raises uncertainties about the growth in poultry exports. Russia accounts for about 36 percent of all U.S. poultry meat exports. Forecasts may be adjusted as more information becomes available.

Red meat exports are expected to total about 3.68 billion pounds this year, down 4 percent from last year as both beef and pork exports decline. The decline in red meat exports is largely due to a strong dollar, worldwide economic weakness, and increased competition from other countries. Japan--the largest customer for U.S. red meat--is expected to have a lackluster demand for U.S. red meats this year.

Imports of hogs and cattle are expected to increase this year as relatively low grain prices, the strong dollar, and relatively high feeder animal prices make the United States an attractive market for Canada and Mexico. Hog imports are expected to total about 5.8 million head, while cattle imports total about 2.5 million head.

Dairy prices are expected to average considerably lower in 2002, as substantial recovery in milk production outstrips somewhat weaker growth in dairy demand. However, prices will stay well above those of 2000 because of still-strong demand and hindrances to expanding dairy herds. Milk prices shot to almost $15 per hundredweight (cwt) in 2001 because of extraordinary demand, output-slowing problems during the first half, and a very sluggish production recovery in the second half.

The United States exported 1.56 billion pounds of pork in 2001, 21 percent more than in 2000. U.S. pork exports in 2002 are expected to be about 5 percent lower than 2001, given current expectations for static market growth in Japan, and increased competition from Canadian pork products in Mexico. U.S. imports of live hogs from Canada are expected to increase about 9 percent this year. Feeder pigs are expected to comprise more than 60 percent of live hog imports from Canada in 2002.

The most important foreign markets for U.S. pork in 2001 were Japan--with a 48-percent share of U.S. pork exports; Mexico, with a 20-percent share; and Canada, which accounted for 12 percent of U.S. pork exports. Although very small markets, Russia and the European Union were the fastest growing markets for U.S. pork in 2001, with year-over-year changes of 205 and 480 percent, respectively. These two markets are characterized by significant year-to-year volatility and together accounted for less than 10 percent of U.S. exports last year.

Total Japanese pork imports in 2002 are expected to be about the same as last year. The key determinants of 2002 Japanese pork import demand are likely to be BSE-related developments, and how the Japanese Government addresses consumers’ food-safety concerns. The appearance of more BSE-afflicted cattle in Japan would likely cause consumers to further substitute pork in place of beef in their diets. In addition, the means chosen by the Japanese Government to resolve the various meat-labeling scandals that occurred in late 2001 have implications for Japanese meat demand. Meat consumption growth in Japan is contingent on consumers’ confidence in the system that delivers meat products to retail outlets. Lack of consumer confidence in meat delivery systems may negatively impact Japanese pork imports.

Although the current safeguard (The safeguard is a WTO-legal means of slowing surges of imports that damage domestic producers, by increasing the minimum pork import price) is due to expire at the beginning of the new Japanese fiscal year on April 1, it is possible that the safeguard could be re-imposed later in the year. As in the past, a safeguard would likely favor high-end, fresh cuts from the United States and Canada, at the expense of frozen pork products. The effects of another safeguard in 2002 are largely dependent on how the BSE situation develops in Japan. Clearly, when BSE is a factor in the Japanese market, the safeguard loses relevance. Japanese consumers are more willing to pay higher, safeguard-driven prices for pork when BSE is in the news.

U.S. exports to Mexico are expected to increase in 2002, but U.S. exporters will likely continue to be challenged for shares of the Mexican market by Canadian exporters. A strong U.S. dollar may continue to provide incentives for Mexican buyers to switch to lower priced Canadian pork products. The United States imported slightly less pork in 2001-- about 950 million pounds, or 2 percent less than in 2000. The decrease is attributable to the brief period in the spring when Denmark was barred from the U.S. market because of the European FMD outbreak. Imports in 2002 are expected to be about the same as last year, with Canada continuing to increase its share of the U.S. market. An expanding pork industry in Canada allows U.S. buyers to source Canadian cuts more conveniently and more cheaply than Danish products.

The United States imported 5.3 million hogs from Canada last year, 59 percent of which were feeder pigs. Animal and Plant Health Inspection Service data indicate that the destination States for over 93 percent of Canadian feeder pig imports were located in the U.S. Corn Belt (Iowa, Kansas, Missouri, Nebraska, Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin). Seventy-two percent of Canadian barrows and gilts for slaughter were destined for the Dakotas or States west of the Rocky Mountains. Only 12 percent of barrows and gilts imported from Canada were shipped to Corn Belt States. In short, hog flows from Canada reflect the “pull” of available slaughter space and cheap feed. Current import expectations for 2002 reflect large breeding herd expansions in Manitoba and Ontario, as reported by Statistics Canada in February. The United States is expected to import roughly 5.8 million hogs from Canada in 2002.

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