October beef exports lower year over year in most markets

Beef export value per head of fed slaughter averaged $284.56 in October, down 10% from a year ago, while the January-October average was down 4% to $308.04. October exports accounted for 12.9% of total U.S. beef production and 10.5% for muscle cuts only, down from 14.1% and 11.6%, respectively, last year. For January through October, exports accounted for 14.1% of total beef production and 11.5% for muscle cuts, each down about one-half of a percentage point from 2018, when a record percentage of production was exported.

Tariff relief for U.S. beef is also a key component of the new trade agreement with Japan, where competitors currently enjoy a significant tariff rate advantage. The rate for U.S. beef muscle cuts is 38.5% but will drop by nearly one-third when the agreement enters into force, mirroring the 26.6% rate imposed on Australian, Canadian, Mexican and New Zealand beef. Another rate reduction will come April 1, when the Japanese fiscal year begins. October beef exports to Japan were down 21% in volume (21,315 MT) and 19% in value ($135.5 million). Through the first 10 months of the year, export volume fell 6% to 263,054 MT, while value was down 7% to $1.64 billion.

"Japan's 38.5% tariff rate is the highest U.S. beef faces in any major market," said U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom. "It was a burden even when all suppliers were paying it, but now it is especially important that both U.S. beef and pork receive tariff relief. Japanese customers are very excited about the new trade agreement, and USMEF and our industry partners are ramping up 2020 promotions and strategies to reclaim red meat market share in Japan."

Beef variety meat exports to Japan (mainly tongues and skirts) have been a bright spot in 2019, increasing 21% in volume (53,432 MT) and 13% in value ($320 million, which is 40% of the worldwide total). Japan's tariff rate for U.S. beef variety meat is 12.8%, but under the new agreement, it will drop to 5.8% for skirts and 5.7% for tongues upon implementation. The rates fall to zero by 2028 for tongues and 2030 for skirts.

U.S. beef exports to South Korea slowed in October but remain on a record pace as Korea solidifies its position as the top growth market for U.S. beef in 2019. October volume dipped 3% year over year to 19,637 MT, while value declined 10% to $138.4 million. But through October, exports to Korea were still up 7% in both volume (215,194 MT) and value ($1.55 billion).

Beef exports to Taiwan following a pattern similar to Korea, slowing in October but remaining on a record pace. Through the first 10 months of the year, export volume to Taiwan was up 8% from a year ago to 52,968 MT, while value increased 3% to $470.3 million. The U.S. holds nearly 75% of Taiwan's high-value chilled beef market.

January-October highlights for U.S. beef include:

In Mexico, the third-largest destination for U.S. beef exports, volume was slightly below last year at 196,431 MT (down 1%), but value increased 4% to $916.4 million. This was largely driven by a sharp increase in the per-unit value of beef variety meat exports to Mexico, most notably tripe. Despite being up just 1% from a year ago in volume (80,789 MT), variety meat value to Mexico jumped 17% to $219.1 million.
Similar to Mexico, U.S. beef variety meat is commanding stronger prices in Egypt, the leading destination for U.S. beef livers. Through October, variety meat exports to Egypt were up 1% from a year ago at 53,504 MT but climbed 14% in value to $62.3 million.
Led by surging demand in Indonesia and solid growth in the Philippines, beef exports to the Association of Southeast Asian Nations (ASEAN) region were 30% above last year's pace in volume (51,758 MT) and 15% higher in value ($251.5 million). Split fairly evenly between muscle cuts and variety meat, exports to Indonesia soared 72% in volume (19,889 MT) and 43% in value ($71.8 million) from a year ago.
Led by strong growth in Panama, beef exports to Central America were 7% above last year's pace in volume (12,802 MT) and 13% higher in value ($72.7 million). Export value also trended significantly higher to Guatemala, Honduras and Costa Rica.