U.S. pork exports continue to sag in July

U.S. pork exports continue to sag in July

Economic headwinds continued to slow U.S. pork exports in July, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

July pork exports totaled 166,604 metric tons (mt), down 4 percent from a year ago and the smallest since January. Export value was $443 million, down 23 percent from a year ago and the lowest monthly total in more than four years. For January through July, pork exports totaled 1.25 million mt (down 5 percent) valued at $3.32 billion (down 17 percent).

“Market access issues and the sustained strength of the U.S. dollar continue to make 2015 a very tough year for red meat exports,” said Philip M. Seng, USMEF president and CEO.

Closure of the Russian market to the top three global pork suppliers has not only cut off direct U.S. exports to Russia, but also caused an influx of European and Canadian pork into key markets in Asia, Oceania and Latin America. Compounded by larger production in the major exporting countries, pork prices have been pressured in most major markets, with the exception of China. Even though the record spread between prices in China and the U.S. indicates large export opportunities, limited access for U.S. pork means the benefits are primarily accruing to European suppliers.

China’s mid-August devaluation of the yuan sent currencies of several key importing countries and large competitors lower versus the U.S. dollar. For example, the Korean won, the Taiwanese dollar and the Mexican peso all weakened significantly. As for competitors, the Australian and New Zealand dollars have been trading at levels not seen since 2009 and the Brazilian real is at its weakest point in more than a decade.

“U.S. exports were already facing a very challenging situation with regard to exchange rates, and that situation worsened over the past three weeks,” Seng explained. “This means we must work even harder to differentiate U.S. meat based on attributes other than price by educating international buyers on the quality and value our products deliver. This has always been a strong focus for USMEF, but it’s more important than ever that we establish and maintain customer loyalty in our key markets.”

Pork export volume to Mexico remained strong through July, up 6 percent from a year ago to 411,425 mt. Export value was down 19 percent to $717.6 million, reflecting significantly lower prices for hams and other items commonly shipped to Mexico. The market has also seen an infusion of Canadian pork due to the closure of Russia (formerly Canada’s third-largest market) and weakness of the Canadian dollar.

January-July exports to Korea were up 39 percent in volume (115,892 mt) and 31 percent in value ($338.3 million). July exports were still up sharply from a year ago, but were the lowest since September as the market may be cooling due to growing pork inventories.

Exports to Central and South America continued to gain momentum in July, as demand strengthened in key destinations such as Colombia, Honduras and Chile. January-July exports to the region increased 4 percent from a year ago to 70,731 mt, while value was down 4 percent to $180.4 million.

Japan remains the leading value market for U.S. pork, but exports continued to reflect sluggish demand, with large inventories lingering from the huge imports of European pork last year. January-July exports fell 13 percent from a year ago in volume (254,251 mt) and 19 percent in value ($972.8 million).

Through the first seven months of the year, pork exports accounted for 25 percent of total production and 21 percent for muscle cuts only (down from 28 percent and 23 percent, respectively, in the same period last year). Export value averaged $47.14 per head slaughtered, down 30 percent year-over-year and 15 percent lower than in 2013.

Editor’s notes:

Export statistics refer to both muscle cuts and variety meat unless otherwise noted.

One metric ton (mt) = 2,204.622 pounds.