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Global Markets Volatile but US Meat Exports Strong

by 5m Editor
14 October 2008, at 1:27pm

US - Beef and pork exports performed extremely well in August, despite growing concerns about global financial conditions and an upward surge for the US dollar that has diminished the purchasing power of some major trading partners’ currencies.

While August pork plus pork variety meat exports declined in comparison to the record monthly totals set earlier this year, the August total of nearly $444 million pushed this year’s export value past the then-record total achieved in 2007. In just the first eight months of 2008, pork exports reached a value of $3.21 billion, compared to $3.15 billion in all of 2007. The export volume of 1.37 million metric tons (3.03 billion pounds) also exceeds 2007’s year-end total.

“This is really an amazing milestone for pork exports,” said U.S. Meat Export Federation President and CEO Philip Seng. “We knew pork exports were headed for an all-time high in 2008, but for the industry to break that record before Labor Day is quite an accomplishment.”

January-August pork exports have increased 71 percent in volume and 64 percent in value compared to the same period last year. Japan is still the largest value market for U.S. pork, at $992.7 million for the year – an increase of 29 percent over 2007. Japan’s volume of 299,277 metric tons (659.8 million pounds) is up 25 percent over last year. August pork exports to Japan were a near record, and are expected to remain strong through the remainder of this year and in 2009.

Mexico also continues to be a strong growth market, with January-August volume up 35 percent and value up 46 percent over last year - to 237,655 metric tons (523.9 million pounds) valued at $417.3 million. For the remainder of the year, however, activity may decline due to the recent devaluation of the Mexican peso and the broader economic slowdown, with consumers substituting lower-cost food items for red meat.

Pork exports to Russia increased 174 percent in volume and 177 percent in value this year - to 141,446 metric tons (311.8 million pounds) valued at $302 million. August exports to Russia set a new monthly record of 28,012 metric tons (61.8 million pounds) valued at $61.9 million. Seng cautioned that current negotiations regarding tariff rate quota (TRQ) amounts and tariff rates could impact future trade with Russia, but he still looks forward to strong performance for U.S. pork in this market.

“Russian processors will continue to need imported pork in order to satisfy quality requirements and meet current demand,” he said. “While there is some uncertainty with regard to the tariff rates and TRQs we will face, Russia simply doesn’t have the domestic production to satisfy its needs.”

Pork exports to the China/Hong Kong region – this year’s leading destination for U.S. pork in terms of volume - declined again in August, totaling 21,568 metric tons (47.5 million pounds) valued at $37.1 million. This is less than half the record volume recorded in May 2008, but it is still well above the 2007 level and pushed the region’s total for the year to 307,903 metric tons (678.8 million pounds) valued at 533.8 million. Pork muscle cut purchases earlier this year were subsidized by the Chinese government to increase the amount of pork in storage and ease food price inflation. These subsidized purchases have now largely ceased, and China has seen an increase in domestic production and the release of pork stocks into the market. While this has made the market much more challenging for imported pork, high domestic production costs in China will likely force some producers out of business. Therefore, China remains a promising market for U.S. pork exports in 2009 and beyond.

Other August highlights for U.S. pork exports:
  • Exports to Canada remain well above 2007 levels. Through August, results are up 23 percent in volume and 20 percent in value over the same period in 2007. Imports of live Canadian hogs have slowed, however, and analysts are monitoring the impact of mandatory country-of-origin labeling (which took effect on Sept. 30) on pork trade with Canada.
  • Exports to South Korea have increased 47 percent in volume and 28 percent in value over the same period last year, defying the expectations of some analysts who expected some decline in U.S. pork exports here with the reintroduction of U.S. beef into the market. In fact, the August export volume of 10,530 metric tons (23.2 million pounds) was more than double the August 2007 total.
  • January-August exports to the Association of Southeast Asian Nations (ASEAN) have increased 449 percent in volume and 466 percent in value over the same period last year - to 43,737 metric tons (96.4 million pounds) valued at $84 million. While monthly exports to Vietnam and the Philippines have declined from the record volumes recorded during the first half of this year, August volume was still about three times as large as the August 2007 total.
  • Exports to the European Union have increased 153 percent in volume and 144 percent in value over last year. Pork production in the E.U. expected to decline by at least 3 percent next year, which could further strengthen opportunities for U.S. pork. Pork exports are also gaining considerable traction in Eastern Europe, particularly in Bulgaria.
  • Exports to Australia and New Zealand have climbed 23 percent in volume and 14 percent in value over the same period last year, reaching 31,893 metric tons (70.3 million pounds) valued at $79.4 million.

5m Editor