Headwinds weighs on pork exports

Beef exports totaled 112,842 t in November, up 1% from a year ago, while value climbed 6% to $709.2 mill. For January through November, exports reached 1.24 million t, up 8% year-over-year and 6% above the record pace of 2011. At $7.63 bn., beef export value was up 16% and has already broken the full-year record set in 2017 ($7.27 bn.).

Beef export value per head of fed slaughter is also on a record pace, averaging $322.97 in November (up 5% from a year ago) and $320.72 during the first 11 months of 2018 (up 14%). Exports accounted for 13.1% of total November beef production and 10.9% for muscle cuts, both steady with November 2017. For January through November, exports equated to 13.4% of total production and 11.1% for muscle cuts – up from 12.8% and 10.3%, respectively, in 2017. These numbers highlight the strong international demand for US beef as exports are accounting for a larger share of growing US production and are fetching higher prices, with some US cuts trading at record prices in Asia.

November pork exports totaled 206,852 t, down 8% year-over-year, while value fell 12% to $538.7 mill. as retaliatory duties in key markets continue to generate headwinds for US pork. For January through November, exports were steady with 2017’s record pace at 2.23 mill. t and value was down 1% to $5.86 bn.

Trade barriers are also pressuring pork export value on a per-head basis. In November, export value per head slaughtered was $48.80, down 16% from November 2017. Through the first 11 months of 2018, per-head export value averaged $51.46, down 3%. Exports accounted for 24.5% of total November pork production and 22% for muscle cuts, down from 27.7% and 24.1%, respectively, in November 2017. For January through November, exports equated to 25.7% of total pork production (down from 26.5% in 2017) and 22.4% for muscle cuts (up slightly).

After a very solid start to 2018, November pork exports to leading volume market Mexico were lower year-over-year for the sixth consecutive month (61,344 t, down 14%) while value fell 30% to $97.1 mill. This pushed January-November export volume slightly below the record pace of 2017 at 717,618 t (down 1 %) while value was down 11% to $1.22 bn.

January-November pork exports to China/Hong Kong were down 29% year-over-year in volume (324,623 t) and fell 19% in value ($790.2 mill.). This region is by far the largest destination for US pork variety meat, and these exports also declined by 29% in volume (209,090 t) and dropped 17% in value ($555.5 mill.) as the 62% tariff rate makes it very difficult for US pork to compete in China.

The combination of retaliatory tariffs in China and Mexico contributed to sharp decreases in ham and picnic primal values (down 19% and 22%, respectively, from June through December, compared to the same period in 2017). The decrease in values for these two primals averaged $9.95 per head for those seven months. China’s retaliatory tariffs have also heavily impacted prices for pork offals and have forced some products into rendering due to the lack of alternative markets. Lost value for feet and picnic hocks was at least $1.80 per head and losses are even worse when products that have been rendered are included. The cost of these retaliatory tariffs has been lost value of at least $11.75 per head on just hams, picnics and feet, or roughly $860 mill. in industry losses from June through December 2018.