March Beef Exports Set New Value Record

Mon, 07 May 2018

US - Strong March results capped an excellent first quarter for US red meat exports, according to data released by USDA and compiled by USMEF, as beef exports set a new monthly value record in March. 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 per cent year-over-year and topping the previous high set in October 2014. Export volume was 111,994 metric tons (mt), up 6 per cent from a year ago. For the first quarter of 2018, exports were 9 per cent ahead of last year’s pace in volume (318,073 mt) and jumped 19 per cent in value ($1.92 billion).

Exports accounted for 13.6 per cent 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 per cent – up from 9.9 per cent last year. For January through March, exports accounted for 13.2 per cent of total production and 10.7 per cent for muscle cuts, up from 12.4 per cent and 9.8 per cent, respectively.

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

Asian and Latin American markets drive big jump in beef export value

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

March was the final month in which the higher safeguard tariff rate (50 per cent versus the normal 38.5 per cent) was applied to Japan’s imports of frozen US beef. The higher rate took effect in August and expired on 1 April 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.

"US 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 US beef still faces a widening tariff rate gap in Japan compared to Australian beef, and US 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 per cent for frozen cuts and 29.3 per cent for chilled, while the rate for beef from most other suppliers is 38.5 per cent (Mexico’s EPA rate is 30.8 per cent). 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 per cent for frozen and 23.5 per cent for chilled, but will be phased down to 9 per cent 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, US beef enjoys a tariff rate advantage in South Korea under the Korea-US Free Trade Agreement. This has helped push US beef’s presence in Korea to new heights as US beef drives Korea’s overall consumption growth and especially its soaring appetite for steaks.

Through the first quarter, export volume to Korea was 22 per cent ahead of last year’s pace at 51,909 mt, while value increased 37 per cent to $366.3 million. Chilled beef exports to Korea accelerated at an even faster rate, increasing 34 per cent from a year ago in volume (11,408 mt) and 44 per cent in value ($107.9 million).

Other first-quarter highlights for US beef exports include:

  • Exports to Mexico were steady with last year in volume at 57,039 mt and climbed 10 per cent in value to $250.3 million. Mexico is the leading volume destination for US beef variety meat, including tripe, hearts, kidneys and livers. While first-quarter variety meat exports to Mexico declined 4 per cent in volume (25,921 mt), they still achieved a 17 per cent increase in value to $60.5 million.

  • In Taiwan, exports increased 34 per cent year-over-year in volume (13,067 mt) and 48 per cent in value ($126.7 million). This included a 61 per cent increase in chilled beef exports to 5,860 mt, valued at $74.4 million (up 72 per cent). The United States holds 74 per cent of Taiwan’s chilled beef market, the highest of any Asian destination.

  • Exports to China/Hong Kong climbed 34 per cent in volume (35,060 mt) and 61 per cent in value ($269.1 million). Weekly data show that shipments to China cooled in April following China’s proposed tariff increase on a number of US products, including beef. Although these tariffs have not been implemented, the threat of a possible increase has added uncertainty to the Chinese market, which reopened to US beef in June 2017.

  • Fueled by rapid growth in Indonesia, beef exports to the ASEAN region reached 11,157 mt (up 55 per cent year-over-year) valued at $61 million (up 46 per cent). Exports also increased to the Philippines and Vietnam.

  • Strong performances in Chile and Colombia pushed beef exports to South America 42 per cent higher in volume (7,006 mt) and 46 per cent higher in value ($34.3 million). Exports to Peru trended lower in volume but still increased in value.

  • First-quarter demand was very strong in Guatemala, as beef exports increased 56 per cent in volume (1,424 mt) and 45 per cent in value ($8.4 million). Exports to the Central American region were up 15 per cent in volume (3,145 mt) and 17 per cent in value ($17.8 million).

  • Beef muscle cuts continue to make inroads in Africa, where first-quarter exports were up 27 per cent in volume (4,340 mt) and 88 per cent in value ($6.7 million). While last year’s exports to Africa were almost entirely beef variety meat, muscle cuts now account for nearly 30 per cent of export volume and 60 per cent of export value.