US - The latest trade data confirmed what we already suspected, export volumes in September were sharply lower, leaving more product to be absorbed in domestic channels and adding to the downward price pressures for beef and chicken.
There are a number of factors that have negatively impacted US exports but we think the primary drivers are: a) the strong US dollar; b) bird flu restrictions; c) weaker demand in emerging markets due to slow or even negative growth; d) increased competi- tion from other supplying countries as well as overall expansion in global supplies due to lower input costs. Below are the export highlights for the three main species:
Beef: Total exports of fresh/frozen and prepared beef in September were 55,509 MT, 24.1 per cent lower than a year ago. This is the lowest monthly export volume since January.
The slide in US beef exports reflects a dramatic decline in demand from two key markets: Japan and Hong Kong. Exports of fresh/frozen and cooked beef to the Japanese market were just 12,602 MT, 38 per cent lower than a year ago.
This follows a 39 per cent decline in export volume in August. The strong US dollar certainly has been an impediment but it does not fully explain the erosion in Japanese demand.
After all, Japan purchases of Australian beef, the other major supplier to this market, were down 22.5 per cent in August, 8.5 per cent in September and 7.1 per cent in October.
Rather, we think part of the reason is that prices for competing meats have declined dramatically, impacting beef demand. Beef exports to Hong Kong were 7,552 MT, down 36 per cent from a year ago. The decline in shipments to Japan and Hong Kong explains about 2/3 of the overall drop in US beef exports in September.
Pork: US pork exports rebounded in September, in line with the seasonal increase in pork supplies. The increase was a bit larger than earlier speculated and we noted a significant increase in pork exports to China. As we have noted in the past, it is interesting to point our that the weekly pork exports somehow continue to miss the volume of pork that goes to China.
Total exports of fresh/frozen and processed pork in September were 138,400 MT, 17.5 per cent higher than a year ago and the largest monthly export volume since June. Exports to China in September were 10,086 MT compared to just 2,319 MT last year.
However, keep in mind that in September 2013 pork exports to China were 16,882 MT. Pork exports to Japan were 31,589 MT, 22.5 per cent higher than the same period a year ago but at about the same level as in September 2013.
Chicken: Resumption of trade with South Korea certainly is welcome news for the US chicken industry, which has struggled with stunted export markets this past summer. Total exports of fresh/frozen chicken meat in September were 212,613 MT, down 58,422MT(-21.6 per cent ) from a year ago.
At the same time, chicken production in September was up 5.4 per cent higher than last year. Exports to China, South Korea and Angola were down a combined 21,808 MT (-57 per cent ) from last year. Bird flu bans, a strong US dollar and higher global output have impacted chicken trade.
TheCattleSite News Desk