Red meat exports in the first half of 2018 were a cause of celebration for U.S. livestock producers. With both pig and cattle herds amid expansion and inventories at record highs, exports have become even more critical to maintaining positive prices for producers.
Trade headwinds were not expected, however.
Despite the trade turmoil, U.S. exports of beef and pork remain above last year’s pace, Joe Schuele, U.S. Meat Export Federation’s vice president of communications, told Chip Flory on AgriTalk.
“There's a lot of good news there, especially on the beef side,” Schuele said. “Pork exports also had a good half. But as you saw on our report— we didn't sugarcoat it. We gave some warning signs that the second half could be a struggle if we don't get some of the trade disputes worked out.”
“Good news on the lamb side too. Lamb had kind of a tough year on the export side in 2017 and we're seeing a nice rebound there,” he adds.
Caution Lights Ahead
Tariffs did pull down pork exports in May and June compared with a year ago, but Mexico held up well, Schuele said. Numbers for early July, not reflected in this report, are likely to see more change as the tariff rate increased to 20%.
“Under that 10% tariff, we were down a little bit in Mexico—about 7%,” he said. “But to put that into perspective, June of 2017 was our largest-ever month to Mexico. So, to be down 7% is not terrible news, but we really have to re emphasize to our Mexican customers the advantage of buying that fresh pork that's just a couple hours off the production floor. We get it right down there fresh, never frozen into that market.”
First-half exports to China/Hong Kong were 21% below last year's pace in volume (216,008 mt) and down 9% in value to $507.2 million.
June exports were hit especially hard, declining 37% from a year ago in volume (28,569 mt) and 19% in value ($70.7 million).
“Every pork supplier knew they were competing in a tighter space in China and Hong Kong this year,” he added. “And now we're competing in that tighter space with a very high tariffs rate.”
Demand in other markets, however are good. Korea, Southeast Asia, especially the Philippines have all bumped up their purchases of U.S. pork now that China is a tougher market for us.
“Both Central and South America really, really outstanding first half and we're hoping to see a little bump in the second half as we start to ship to Argentina. We think we can make some inroads in Argentina in the second half of the year,” Schuele said.
Read more: Tariffs Challenge U.S. Pork in Mainstay Markets
Listen in as Schuele explains the growing potential in several Centralia American markets—six of those small countries rank in the top 20 destinations for U.S. pork