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March Beef Exports Set New Value Record; Pork Exports Also Strong
USAgNet - 05/07/2018

Strong March results capped an excellent first quarter for U.S. red meat exports, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF), as beef exports set a new monthly value record in March and pork export value reached the second-highest level on record. The United States is exporting a strong share of its beef and pork production at higher prices -- a clear sign of solid international demand.

March beef export value was $693.1 million, up 18 percent year-over-year and topping the previous high set in October 2014. Export volume was 111,994 metric tons (mt), up 6 percent from a year ago. For the first quarter of 2018, exports were 9 percent ahead of last year's pace in volume (318,073 mt) and jumped 19 percent in value ($1.92 billion).

Exports accounted for 13.6 percent of total beef production in March, up nearly a full percentage point from a year ago. For muscle cuts only, the percentage exported was 11.1 percent -- up from 9.9 percent last year. For January through March, exports accounted for 13.2 percent of total production and 10.7 percent for muscle cuts, up from 12.4 percent and 9.8 percent, respectively.

Beef export value averaged $332.89 per head of fed slaughter in March, up 23 percent from a year ago. For the first quarter, per-head value averaged $315.67, up 18 percent.

On the pork side, March export volume was steady with last year at 227,363 mt, while value increased 4 percent to $610.4 million -- trailing only the November 2017 record of $615.8 million. For the January-March quarter, volume increased 1 percent year-over-year to 636,297 mt, while value was up 8 percent to $1.7 billion.

Exports accounted for 27.5 percent of total pork production in March, down from 28 percent a year ago, while the percentage of muscle cuts exported increased slightly to 23.5 percent. First-quarter exports followed a similar pattern, accounting for 26.6 percent of total production (down from 27 percent a year ago) and 23 percent for muscle cuts only (up from 22.6 percent).

March pork export value averaged $56.91 per head slaughtered, up 4 percent from a year ago, while the January-March average increased 5 percent to $54.81.

March beef exports to leading market Japan were steady with last year's pace at 28,158 mt, while value increased 6 percent to $177.5 million. For the first quarter, exports to Japan were down 3 percent in volume (72,440 mt) but still increased 8 percent in value ($459.5 million). This included a 6 percent increase in chilled beef to 35,290 mt, valued at $275 million (up 18 percent).

March was the final month in which the higher safeguard tariff rate (50 percent versus the normal 38.5 percent) was applied to Japan's imports of frozen U.S. beef. The higher rate took effect in August and expired on April 1 with the beginning of the new Japanese fiscal year.

"While beef exports to Japan held up well during those eight months, the higher tariff rate certainly weighed on exports of frozen cuts such as short plate," explained USMEF President and CEO Dan Halstrom. "U.S. short plate is an essential ingredient for Japan's gyudon restaurants, which are part of a highly competitive fast-casual dining sector. We are pleased to have the higher safeguard tariff rate behind us, though U.S. beef still faces a widening tariff rate gap in Japan compared to Australian beef, and U.S. beef remains subject to Japan's quarterly safeguard mechanisms for chilled and frozen imports. USMEF continues to monitor this situation, and we are hopeful that the frozen beef safeguard will not be triggered this year."

Through an economic partnership agreement (EPA), Australian beef entering Japan is subject to tariff rates of 26.9 percent for frozen cuts and 29.3 percent for chilled, while the rate for beef from most other suppliers is 38.5 percent (Mexico's EPA rate is 30.8 percent). Imports from EPA suppliers also are not subject to Japan's quarterly safeguards. Australia's tariff rates decline annually until they reach a floor of 19.5 percent for frozen and 23.5 percent for chilled, but will be phased down to 9 percent once the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is implemented. Japan's beef imports from Canada, New Zealand, Mexico and Chile will receive the same benefits under CPTPP.

Conversely, U.S. beef enjoys a tariff rate advantage in South Korea under the Korea-U.S. Free Trade Agreement. This has helped push U.S. beef's presence in Korea to new heights as U.S. beef drives Korea's overall consumption growth and especially its soaring appetite for steaks. Through the first quarter, export volume to Korea was 22 percent ahead of last year's pace at 51,909 mt, while value increased 37 percent to $366.3 million. Chilled beef exports to Korea accelerated at an even faster rate, increasing 34 percent from a year ago in volume (11,408 mt) and 44 percent in value ($107.9 million).

March exports of U.S. lamb were lower than a year ago in volume (845 mt, down 9 percent) and value ($2 million, down 10 percent). But for the first quarter, exports still climbed 25 percent in volume (2,484 mt) and 8 percent in value ($5.4 million). Growth was driven by larger muscle cut shipments to the Bahamas, the Turks and Caicos Islands, Canada, the Philippines and Taiwan, and stronger demand for variety meat in Mexico.

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