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US Beef Exports Show Strength in First Quarter

14 May 2010

US - US beef and pork muscle cut exports performed well in March, concluding the first quarter of 2010 with increasing momentum. A sluggish global market for variety meat held down the overall totals, but muscle cut export value for both products are running ahead of their 2009 pace.

Beef muscle cuts are off to a particularly strong start in 2010, increasing 22 per cent in volume to 156,947 metric tons (346 million pounds) for the quarter. The increase in value was even higher, up 24 per cent to $678 million. The combined beef/beef variety meat totals are also impressive, rising 11 per cent in volume (to 225,122 metric tons or 496.3 million pounds) and 14 percent in value (to $788.5 million). Total beef exports accounted for 10.6 per cent of overall production in March compared to 9.4 per cent in March 2009. Export value per steer and heifer slaughtered equated to $127.40, compared to $110.67 last year.

Pork muscle cut exports pulled ahead of their 2009 pace by 1 per cent in volume (356,297 metric tons or 785.5 million pounds) and 2 per cent in value ($941.9 million). Combined pork/pork variety meat totals are slightly behind last year in both volume (468,793 metric tons or 1 billion pounds) and value ($1.11 billion).

On a positive note, the value of total pork exports in March edged up 1 per cent compared to March 2009, and it was 18 per cent ahead of the value of pork exports in March 2008, a record-setting year for US pork exports.

Pork exports accounted for 22.5 per cent of total production compared to 25 per cent in March 2009, but muscle cut exports accounted for 19 per cent of production, the same as one year ago. Per-head pork export value equated to $39.80 – which is down about $1 from March 2009.

The results for both beef and pork exports were achieved despite significant declines in each of their leading value markets. Beef exports to Mexico continue to struggle due to weakness in Mexico’s economy. Though beef muscle cut exports managed to pull within 7 per cent in volume and 10 per cent in value of their 2009 pace, variety meat exports to Mexico are still down dramatically.

Pork exports to Japan – which exceeded $1.5 billion in each of the last two calendar years – have slowed due to unusually high inventories of domestic pork. Muscle cut exports to Japan are within 13 per cent in volume and 11 per cent in value of last year’s pace. But while variety meat makes up only a small portion of the US pork shipped to Japan, those exports are down 62 per cent in volume and 46 per cent in value.

Beef exports booming overseas, but still struggling in Mexico

With the exception of Mexico, US beef exports are surging in nearly all key global markets. Asian markets are performing well across the board, with excellent gains also posted in Canada, the Middle East, the Caribbean and Europe, and explosive growth achieved in Russia.

Canada solidified its position as the No. 2 volume and value market for US beef, with first quarter beef/beef variety meat totals reaching 32,045 metric tons 70.6 million pounds) valued at $139.4 million. This is an increase of 14 per cent in volume and 19 per cent in value over 2009.

Japan is the No. 3 value market at $95.3 million – up by 33 per cent over the first quarter of last year. In terms of volume, Japan is up 37 per cent to 18,487 metric tons (40.8 million pounds). While the United States and Japan recently undertook a new round of discussions on market access for US beef, these gains were achieved despite Japan’s restriction of US imports to beef from cattle 20 months of age or younger. South Korea surpassed Japan slightly in terms of first-quarter volume (18,763 metric tons or 41.4 million pounds) and is the No. 4 value market at $78.2 million. This is an impressive increase of 11 percent in volume and 24 per cent in value over 2009, but recent Korean import data tell an even more positive story. These data show imports of US beef/beef variety meat increasing 66 per cent in the first quarter, with the United States accounting for more than 30 percent of Korea’s beef imports. Korea’s April data show an 80 percent increase in imports of US beef. Weekly US export data compiled in April suggest that Korea is currently the second-largest market for US beef muscle cuts, trailing only Mexico.

Other first-quarter beef highlights include:

The recent addition of bone-in beef cuts has helped bolster exports to Taiwan, which gained 85 per cent in volume (8,488 metric tons or 18.7 million pounds) and nearly doubled in value to $45 million. While the expansion of eligible products generated some negative local publicity, USMEF worked very closely with importers and end-users of US beef to reassure them about product safety and quality. As a result of these ground-level efforts, consumer response has been positive and beef exports continue to gain significant momentum in Taiwan.

Despite exports to Vietnam being about equal to 2009, the ASEAN region continued to show a strong increase in demand for US beef. Led by outstanding growth in the Philippines and Indonesia, beef/beef variety meat exports to the region are up 12 per cent in volume (21,936 metric tons or 48.4 million pounds) and 11 per cent in value (to $71.2 million).

Beef/beef variety meat exports to Hong Kong more than tripled in both volume (7,613 metric tons or 16.8 million pounds) and value ($28.8 million).

The Middle East continued its growth as a major destination for US beef, gaining 37 per cent in volume (to 25,963 metric tons or 57.2 million pounds) and 51 per cent in value (to $43.9 million). The increase in muscle cut volume (158 per cent) and value (72 per cent) were even more impressive. While the region has long been a mainstay market for US beef variety meat, muscle cuts continue to make up a higher percentage of exports to the Middle East.

Russia, which almost exclusively purchased beef livers in 2009, is now importing US beef muscle cuts at a pace not seen since mid-2008. This resurgence is reflected in Russia’s combined beef/beef variety meat totals, which more than doubled over last year (to 12,855 metric tons or 28.3 million pounds) and increased by more than 400 per cent in value to $28.9 million.

Impressive gains were also posted in the Dominican Republic, which was up 130 per cent in volume and 108 percent in value. The rest of the Caribbean region increased substantially as well, up 30 per cent in both volume and value. The European Union (up 37 per cent in volume and 80 per cent in value) and Central and South America (up 39 per cent in volume and 44 percent in value) also gained significant ground over 2009.

These results left Mexico as the only major beef market trailing last year’s pace, but even this decline is largely attributable to variety meat. Variety meat exports to Mexico are down 44 percent in volume and more than 60 per cent in value, while muscle cuts are down 7 per cent and 10 per cent respectively. Despite this decline, Mexico remained the largest destination for US beef/beef variety meat at 58,156 metric tons (128.2 million pounds) valued at $184.7 million.

“As a beef producer, I can’t help but be extremely excited about these global results,” said USMEF Chairman Jim Peterson, a rancher from Buffalo, Mont. “We’re confident that US beef will rebound in Mexico when economic conditions improve. And when that happens, US beef is well-positioned for a remarkable performance in 2010.”

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