15 December 2008

6 minute read

North America

The story for US beef remains positive. Although smaller than the summer peak, beef plus beef variety meat exports were relatively strong in October, exceeding October 2007 volume levels by 16 percent. US beef and variety meat exports for the month reached 89,205 metric tons (196.7 million pounds) valued at $348.3 million, exceeding year-ago export value totals by 31.4 per cent. January through October beef exports, including variety meat, increased 31 per cent to 840,121 metric tons (1.8 billion pounds), with value surpassing $3.1 billion, an increase of 43 per cent.

“The effects of the global economic turmoil are being felt in many markets, and these market conditions almost certainly have tempered the export numbers that we might have seen from US beef and pork had the credit markets not taken such a hit,” said Erin Daley, economist for the US Meat Export Federation.

“However, we are continuing to see the value and quality of US exports reflected in the export numbers,” she said. “Even with the depreciation in the value of many countries’ currencies, we’re still seeing strong performance by our beef and pork products, defying many expectations. USMEF does understand that some countries are having difficulty distributing imported meat due to dampened consumer demand. This is especially critical in areas like China, with large stocks of frozen pork, and Korea with large volumes of beef in storage. Prices were much higher, even for meat imported just a few months ago, making it difficult to sell under current market conditions.”

October beef highlights

• Mexico – beef exports to the largest US beef export market fell again in October, down 22 per cent from the prior month and 27 per cent from a year ago. Still, exports for the first 10 months of 2008 remain up 14 per cent at 339,137 metric tons (747.7 million pounds). Those same exports were valued at $1.2 billion, a 21 per cent increase in value. Daley noted that the weak Mexican peso has more than offset the decline in US beef prices, making round cuts more expensive than this summer, when prices peaked in US dollar terms.
  
  
• Canada – exports to our No. 2 trading partner also declined again in October to 13,150 metric tons (29 million pounds), down 17 per cent from September and 20 per cent from a year ago. Totals for 2008 remain up 25 per cent in volume to 133,005 metric tons (293.2 million pounds) valued at $623.2 million, a 28 per cent rise. Daley expects that the weak Canadian dollar, fewer live cattle exports to the United States and the COOL implications will continue to influence beef trade with Canada.
  
  
• Japan – exports here rebounded some in October to 7,170 metric tons (15.8 million pounds), the largest volume since July. January through October exports were up 63 per cent to 64,679 metric tons (142.6 million pounds) valued at $333 million, a 61 per cent jump in value over 2007. When compared to the first 10 months of 2003, beef exports to Japan in 2008 are equivalent to 20 per cent of export volume and 28 per cent of export value.

“Since the yen is basically the only currency that is strong relative to the US dollar at this time, exports to Japan should continue at a strong pace, though limited by a smaller number of cattle under 21 months of age being processed through the winter months,” Daley said.

• South Korea – the second-largest destination for US beef exports in October, South Korea imported 15,561 metric tons (34.3 million pounds) of beef and variety meat valued at nearly $83 million, down slightly from September totals. For the year, exports weighed in at 46,946 metric tons (103.5 million pounds) valued at nearly $245 million, up 87 and 107 per cent, respectively, compared to last year.

“With the three major retailers resuming US beef sales since Thanksgiving, US beef is finally moving into the Korean market in significant volumes,” Daley said. “Unfortunately, Korea has been hit especially hard during the global financial crisis, with the won losing about 30 percent relative to the US dollar over the past few months, although the won is rebounding slightly in December. Luckily US beef is a high quality, affordable option for Korean consumers, at a much lower price than domestic Hanwoo beef.”

• ASEAN – this region continues to import at a healthy rate: 5,363 metric tons (11.8 million pounds) in October, up 46 per cent compared to last year. Total 2008 volume is up 261 per cent to 45,083 metric tons (99.4 million pounds) valued at $137 million, up 325 per cent. Vietnam is still taking the majority of the beef, accounting for 33,969 metric tons (74.9 million pounds) for the year and 4,348 metric tons (9.6 million pounds) in October. Thus far in 2008, exports to Vietnam are up 318 per cent in volume and 500 per cent in value, reaching $107.2 million.
  
  
• Middle East – exports rebounded 28 per cent in October from the previous month. Compared to October 2007, exports are still down 15 per cent in volume but are up 17 per cent in value. For the year, exports are down 5 per cent in volume (76,122 metric tons or 167.8 million pounds) but up 33 per cent in value to $121.9 million. Egypt still accounts for the bulk of export volume, mainly livers, with growing beef markets in the UAE and Saudi Arabia.
  
  
• Russia – while reduced from the previous three months, US beef exports to Russia continued in October at 6,929 metric tons (15.3 million pounds), mainly comprised of variety meat. Total 2008 exports were 43,671 metric tons (96.3 million pounds), of which 15,438 metric tons (34 million pounds) were muscle cuts compared to just 3,568 metric tons (7.9 million pounds) in all of 2003.
  
  
• Taiwan – exports in October of 1,817 metric tons (4 million pounds) were about even with September volumes and lower than the large volumes seen earlier in the year. January through October exports of 23,021 metric tons (50.7 million pounds) already have set a new annual record for beef exports to Taiwan, and are up 29 per cent from last year to date. Daley noted that buying pressure from Korea has led to higher US beef prices. When combined with larger beef inventory volumes and weaker consumer demand, these factors have pressured US beef export volumes to Taiwan. This trend is expected to continue, likely with increased competition from Australian beef.
  
  
• European Union – October exports to the EU were the largest yet this year at 1,947 metric tons (4.3 million pounds). Year-to-date exports total 17,298 metric tons (38.1 million pounds) valued at $87.1 million, an increase of 63 per cent in volume and 134 per cent in value versus 2007. Again, EU import data should be used, as this volume would exceed available import licenses for the HQB (high-quality beef) tariff quota of 11,500 metric tons (25.4 million pounds) for the July-June period. Daley noted that USMEF is aware of some frozen beef trade outside the HQB, but not likely to the extent reported by US export data. Regardless, US beef is becoming more widely distributed in the EU though exports could be pressured by falling beef prices in the rest of the world and thus the widening gap between US beef prices and those from South America and Australia, heavily influenced by the strong US dollar.

TheCattleSite News Desk