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Agricultural News

OSU's Dr. Derrel Peel on Meat Export Challenges

Mon, 17 Aug 2020 10:16:33 CDT

OSU's Dr. Derrel Peel on Meat Export Challenges Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel talks about meat export challenges.

The U.S. is on track for record production of beef, pork and broilers in 2020. Before COVID-19, it was recognized that meat trade would be critical for markets in 2020 and that certainly remains true at this point. After the severe disruptions in the first half of the year, expectations for meat trade have been revised and there is more uncertainty about global meat markets going forward.

Pork exports through June are up 27.4 percent year over year, led by a 335.6 percent year over year increase in pork exports to China. China has replaced Mexico as the top pork export destination, with Mexico down 2.8 percent for the year to date. Number three pork export market Japan is up 2.8 percent so far in 2020 following a 23.2 percent year over year decrease in June.

Broiler exports are up 4.2 percent year over year thus far in 2020, with latest data for June showing a 1.1 percent decrease from one year ago. Mexico remains the largest broiler export market with year to date exports up 2.0 percent following a 6.0 percent year over year decrease in June. China is the second largest broiler export market accounting for 7.6 percent of total broiler for the first half of 2020. The sum of broiler exports to China and Hong Kong, a better measure of total broiler demand in China, is up 173.5 percent year over year in the January-June period.

Year to date beef exports are down 7.6 percent for the January-June period, following a 33.0 percent year over year drop in June and a similar decrease in May. Japan remains the largest U.S. beef export market and is up 5.6 percent year over year in the first half of 2020. However, this follows a 20.7 percent decrease in June and a 23.6 percent year over year decrease in May. Number two South Korea is down 7.4 percent year over year through June following double-digit monthly decreases in April, May and June. Mexico, the number three market in recent years has seen monthly decreases averaging 66.9 percent in the second quarter, dropping Mexico to the fourth largest beef export market with a year to date total down 37.7 percent from one year ago. Canada, currently the third largest beef export market, is up 12.0 percent in the first half of the year. China remains a small beef export market (1.4 percent of total exports this year) but is up 70.9 percent for the year to date. Hong Kong is down 8.0 percent so far this year and the combined total of China and Hong Kong is up 0.2 percent for the year to date.

With a weaker global economic situation, meat trade forecasts have been revised. Total pork and broiler exports are still projected higher year over year but beef exports are now projected to be lower year over year. China will continue to be a major driver of global protein trade, especially pork. Mexico remains a major concern with dramatic economic weakness expected to continue. Four of the five largest beef exports markets dropped sharply in the second quarter; and will be watched closely for recovery in the second half of the year. China will remain a minor beef export market in 2020 but is likely to continue growing, barring major geopolitical disruptions.



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