Source: Rita Jane Gabbett, MEATINGPLACE, 5/23/17
Even in the face of strong first quarter U.S. beef and pork exports, there is plenty of trade policy uncertainty to worry about, warned U.S. Meat Export Federation officials at a news conference as they gathered here for their annual conference.
While U.S. beef and variety meat exports were up 15 percent in the first quarter from a year ago, including gains of 41 percent in Japan, 23 percent in South Korea, 17 percent in Mexico and 14 percent in Canada, USMEF officials pointed to the dip in the Australian cattle cycle as the main contributor, which could evaporate in the coming months.
“Their short supply is giving us traction,” said Joel Haggard, USMEF senior vice president, Asia Pacific, but noted that while Australian beef exports are currently down 12 percent, their forecast for the year is a decline of only 3 percent and as their cattle cycle starts to turn, they will return to the market with competitive pricing.
With the U.S. withdrawal from the Trans-Pacific Partnership soon after President Donald Trump was inaugurated in January, Haggard and USMEF President Phil Seng both warned that 18 to 24 months from now when Australia can offer beef volume and competitive prices at duty rates that are “double-digit lower than ours,” U.S. exporters will be handicapped.
Earlier this month, the White House announced a deal with China that promised after one more round of technical consultations, China would resume imports of U.S. beef starting no later than July 16.
“I think it will be a slow start, but it looks very promising,” said Haggard, noting that U.S. grain-fed beef fits well into the types of beef dishes in demand in Chinese foodservice.
Haggard said Chinese importers are showing a lot of interest, but pricing will be important and those details have yet to emerge. He said it is also unclear what type of traceability language will emerge from the technical talks, but said it is USMEF’s understanding that China will be accepting beef from cattle that are less than 30 months of age, a condition easily met by most fed slaughtered cattle in the United States.
Seng noted that China has agreed to equivalency on determining plant eligibility to export to China, meaning USDA would determine which plants are eligible and China would not be able to unilaterally ban individual plants from exporting to their market.
As for pork exports to China, Haggard said while first quarter numbers were strong, even against last year’s strong exports, “We don’t think they are going to have that bump in imports we saw last year, but we think 2017 will still be second-largest import year for China for pork.”
Mexico, NAFTA
As the United States, Mexico and Canada prepare to re-negotiate the North American Free Trade Agreement, USMEF Regional Director, Mexico, Central America and the Dominican Republic Oscar Ferrara said Mexico is looking for other sources for meat imports, including from Brazil, Argentina, Chile, Australia and New Zealand.
“The main issue is uncertainty,” Ferrara said.
Both Ferrara and Seng expressed concerns that agriculture products not be used as bargaining chips in NAFTA negotiations on other issues such as auto parts and other manufacturing industry issues.
Seng said USMEF welcomes the NAFTA renegotiation with Canada and hopes those talks with both countries could include improved rules around dispute settlement and the use of science-based data when making trade-limiting decisions.
Trends
In terms of overall export trends, Haggard said Japan is starting to take more beef round cuts, while South Korea has recently started importing more shoulder clods for menu items such as Korean barbeque.
Seng said USMEF is also starting to see a lot of interest in Japan and South Korea for thick cuts, such as steaks, including at retail. And thicker cuts mean greater meat consumption.
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