CARLSBAD, Calif. — The U.S. has improved its competitive position for exporting beef to Asia compared to a couple of years ago.
“The U.S. had lost some share in the global beef market since 2011, but we’re starting to claw back despite the U.S. dollar still being high,” said Joel Haggard, U.S. Meat Export Federation Asia Pacific senior vice president.
“We’re seeing our competitive position increase in Asia primarily because our main competitor, Australia, is at the bottom of its cycle,” Haggard explained. “Their beef export supplies are quite low.”
There have been some interesting dynamics at the cut level, Haggard said.
“Some grass-fed Australian beef cuts are selling higher than Australian grain-fed cuts,” he added.
One of the current issues in the U.S. is a large amount of meat production.
“Beef, pork and poultry production are increasing, so we have a tremendous challenge before us,” said Philip Seng, federation president and CEO.
However, Seng noted, the U.S. is the No. 1 supplier of beef to Korea and this past month eclipsed Australia as the No. 1 supplier of chilled beef to Japan.
“We are making some pretty sizable inroads and the commitment of the industry to these international markets is paying dividends,” he reported from the organization’s strategic planning conference.
Over the past 40 years, the federation has worked to increase the amount of U.S. red meat exports.
“This year, we are approaching close to $14 billion in U.S. red meat exports,” Seng said.
Another challenge for exports is the over capacity in the shipping industry.
“For the first time I can remember since World War II, global trade is down,” Seng said. “In the 1990s, we saw trade growing twice as fast as the overall world economy, and that is not the situation today. So the fact that our export numbers are up is defying the trend.”
With the strong beef demand in Asia, the U.S. is exporting more beef to Japan, Korea and Taiwan.
“A restaurant operator in Korea can expand his business due to the fact that he now has reasonably priced U.S. beef cuts available to serve his customers,” Haggard said. “This is how demand is built in a region.”
China’s beef imports are up 35 percent, Haggard reported, on a large base number.
“With changes in the Indonesia beef import rules, beef imports are up 100 percent,” Haggard said. “That’s one market we are watching very closely long term because it’s low per capita consumption and large population.”
U.S. pork exports to China are up over 100 percent, Haggard reported.
“They are the largest meat importer in history, and this year, they will set new records for beef and pork,” he added. “Lamb imports will be flat, but they are the largest lamb importer in the world.”
Chinese hog prices have been on a slow decline.
“Next year, we may not see the incredible pork import numbers,” Haggard said. “But we still predict they’ll be importing at a higher plateau than they have in the past.”
He expects Asia to remain a “battlefield” for U.S. pork exports.
“European pork exports through August were up 38 percent on a base of over 2 million tons,” he said. “The top five pork export markets for Europe were all Asian countries — China, Hong Kong, Japan, Korea and the Philippines.”
The increase is a result of favorable pricing based on a low Euro, as well as expansion in the European pork industry.
“And Europe diverted shipments from Russia, so they were willing to put that product in the Asian marketplace at whatever price it would clear at,” the federation spokesman explained.
Closer To Home
U.S. beef exports through August to Mexico are up 8 percent.
Although beef consumption in Mexico had been down for several years due to a financial crisis, the near term looks positive, reported Chad Russell, federation regional director for Mexico, Central America and the Dominican Republic.
“We expect the trend of increasing exports to continue until the end of the year,” he added.
Mexico is the No. 2 overall market for U.S. beef in volume, behind Japan, Russell said.
“For the first time since 2011, pork exports to Mexico declined 6 percent through August, from the record level in 2015,” he said.
“For the balance of this year, we believe Mexico’s imports of U.S. pork will be quite strong and China will take less product, which will make more available for Mexico,” Russell predicted.
One of the advantages for the U.S. is with the North American Free Trade Agreement, meat exports enter the Mexican market duty free.
“Mexican pork production has been increasing about 2 percent per year, Russell said, however pork consumption is increasing at a faster rate.
“Mexico imports about 40 percent of what it uses,” he said.
“We think Mexico will remain a strong market for us,” Russell said.