International trade moderating U.S. meat production

Monday, October 17, 2016

Recently released data indicates U.S. meat exports continued to grow year over year for August, with international trade moderating increased U.S meat production.

Beef exports increased 29.5 percent compared to year-ago-levels last year, as did pork exports, up 11.4 percent, and broiler exports, up 16.7 percent. Additionally, beef imports declined 16 percent compared to year-ago levels for August while cattle imports decreased 18 percent compared to a year ago.

“Total U.S. red meat and poultry production in 2016 is projected to increase 2.7 percent over 2015 levels,” said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist. “However, nearly half of the increase is expected to move off-shore with net meat exports projected to increase 11.5 percent compared to 2015.”

Peel believes this will hold domestic meat consumption to a projected 1.3 percent year-over-year increase.

Beef leads the way in 2016 with production projected to increase approximately 4.6 percent over year-ago levels.

“In terms of quantity, the United States will continue to be a net beef importer in 2016 but a nearly 60 percent decrease in net beef imports will limit domestic beef consumption to a projected increase of 1.7 percent year over year.,” Peel said.

Beef exports to Japan were up 43.1 percent in August with a year-to-date total increasing 12.1 percent compared to last year. Beef exports to South Korea increased 70.4 percent in August and are up 26.9 percent for the first eight months of 2016 compared to one year ago. August beef exports to Mexico were up 30.3 percent year over year with a year-to-date total up 12.3 percent.

In the recent-gain-is-still-a-net-loss category, U.S. beef exports to Hong Kong were up 35.6 percent in August but remain 6.6 percent below 2015 for the year to date.

“Among major U.S. beef export destinations, only Canada was down with a 14.3 percent decrease in August and 9.7 percent lower total for the year to date,” Peel said.

Beef imports from Australia continued sharply lower with a 50.7 percent year-over-year decrease in August and a year-to-date total down 34.1 percent from 2015. Beef imports from New Zealand were down 22.8 percent in August and declined 6.2 percent for the first eight months of 2016 compared to one year ago.

Imports of beef from Mexico continue strong with August up 31 percent, resulting in year-to-date imports increasing 10.4 percent year over year. Beef imports from Canada also increased 14.7 percent and are up 14.1 percent for the year to date compared to last year.

Among the minor markets for U.S. beef imports, Nicaragua was up 256.2 percent in August, though the year-to-date total remains down 6.2 percent compared to one year ago.

“It’s possible the August jump in beef shipments from Nicaragua is a move to capture more of the ‘Other Countries’ share of the U.S. tariff rate quota before Brazil began shipments of fresh/frozen beef to the United States,” Peel said.

Imports of Brazilian beef also will fall under the ‘Other Countries’ portion of the beef import TRQ, which amounted to 8.7 percent of the total TRQ for all countries in 2015.

“Those shipments began in late September and may show up as modest year-over-year increases in beef imports from Brazil in the fourth quarter,” Peel said. “Beef imports from Brazil were up 9.1 percent in August but remain 22 percent below last year for the year to date. The impact of more Brazilian access to the U.S. beef market is expected to be limited.”

For the year to date, Brazil represents 4.1 percent of total beef imports while Nicaragua is another 3.2 percent. Imports of fresh/frozen beef from Brazil will compete economically with other import sources such as Nicaragua, Australia and New Zealand.

“In effect, not only are Brazilian beef imports limited by the TRQ but also will likely partially substitute for other beef imports, thereby limiting the impact on total beef imports,” Peel said.