Below are key highlights and implications for July and August:

Beef: Sharply higher US beef prices in May and June have done little so far to slow down the pace of US exports. Total shipments of fresh/frozen and cooked beef for the month were 78,708 MT, 11.7 per cent higher than a year ago.

The gains in exports were broad based. Exports to Japan, the largest market so far this year, were 22,794 MT, 12 per cent higher than a year ago. Higher tariffs for US beef have the potential to nick demand for US beef in this market in the coming month but that is not entirely a given.

Fed cattle prices are lower than in Q2 and a weaker US dollar has the potential to offset the impact from higher tariffs. Exports Mexico in June were 10,898 MT, 16 per cent higher than last year while exports to S. Korea at 13,813 MT were up 13 per cent from a year ago.

The value of US beef exports in June was up by a similar amount. At $521.6 million, US beef export value is up some $54.5 million higher than a year ago. US beef exports are up almost half a billion dollars in beef export value so far this year, a factor that needs to be considered when we look at US cattle prices vs. last year.

And to complete the picture, one also should consider the additional $10 million derived from higher beef variety meat exports in the first half of this year. Based on weekly export data, we are currently projecting beef exports to be up around 6 per cent in July.

If the current pace of shipments is sustained, then August beef exports have the potential to be up around 10 per cent compared to last year. Beef export demand remains in excellent shape but there is always the risk that we could lose ground in Japan to competitors.

The benefit for US beef at this point is that Australia supply availability is significantly lower than a couple of years ago and Japan still does not source beef from South American sources. The recovery in exports to Mexico is a major positive development.

Pork: Total shipments of fresh/frozen and cooked pork in June were 152,071 MT, 4,405 MT (+3 per cent) higher than a year ago. Pork exports averaged 13 per cent above year ago in the first five months of the year and June shipments were the second smallest this year, behind February.

The decline is not unusual as lower slaughter in late spring and summer tends to limit product availability. The positive in the latest data is that exports to a number of key markets in the Americas but also Asia remain quite robust.

The main challenge for US pork exports at this time is China. Pork prices in China have declined and domestic commercial Chinese packers have been rapidly expanding production. While much of the focus in recent years has been on the size of the Chinese breeding herd (it continues to shrink) we would argue that this may not be the best indicator of Chinese supplies.

More stringent environmental measures have accelerated the shift to commercial production, leading to increased efficiencies. US exports of fresh/frozen and cooked pork to China were 12,611 MT, 8,295 MT (-39.7 per cent) less than a year ago.

Mexico has become by far the largest buyer of US pork and that was the case again in June. Total exports to Mexico in June were 51,764 MT (+18.3 per cent) higher than a year ago. By comparison export to Japan, the second largest market for US pork, were under 30,000 MT.

However, even though Japan purchased 43 per cent less pork from the US in June, the value of US pork exports to Japan was $121.8 million compared to $103.9 million for Mexico.