Status of U.S. Meat Product Exports in 1998

Status of U.S. Meat Product Exports in 1998

Despite expectations that slower global economic growth would curtail demand for U.S. poultry and red meat products, U.S. meat shipments in 1998 increased 2 percent to 4.1 million tons. The overall pace of meat exports, up 11 percent through August, slipped dramatically, however, in the latter half of the year as a result of the financial crisis in Russia.

As many markets switched to lower-valued meat cuts and domestic prices weakened, the overall value of meat and products exports dropped 8 percent in 1998 to $7.6 billion. The value of all U.S. meat and product exports declined, with the exception of tallow which experienced a 23-percent jump.

The market highlights of 1998 include:

A significant drop in the overall value of meat exports as beef and pork had a double-digit drop in per unit export values. Prices were driven down by abundant domestic supplies of beef and pork

A more than $300-million drop in meat exports to Russia, which was the United States' second largest market in 1997. A virtual halt in poultry meat shipments accounted for most of the decline, however U.S. pork exports to Russia, which were up 122 percent through August, plummeted after the ruble devaluation.
Mexico rose to be the second largest meat market for the United States, absorbing 11 percent of U.S. meat and poultry shipments. Strong demand for U.S. low-cost pork and beef led to a 19-percent increase in the value ($827 million) of shipments to Mexico.

Demand for U.S. beef exports remained surprisingly strong, growing 3 percent to a record 714,000 tons. However, lower export prices resulted in a 7-percent reduction in export value to $2.3 billion. The average export unit value fell from $3,610/ton in 1997 to $3,257/ton in 1998 as many importers shifted purchases to lower-valued meat cuts to offset economic difficulties
Even though Japan's economy continued to stagnate and the U.S. dollar was stronger in mid-1998, Japanese buyers continued to purchase record quantities of U.S. beef-reaching 369,000 tons. As reflected by the reduced export value-6 percent lower at $1.3 billion-Japanese importers purchased fewer loin cuts, and increased imports of frozen cuts, such as brisket and shortplate.
Beef shipments to Mexico jumped 34 percent to a record 142,000 tons as income growth continued to support increased beef consumption. The large increase to Mexico helped offset large losses to the Korean market, which fell 40 percent to 53,000 tons. U.S. exports to Canada declined 6 percent to 87,000 tons because of large domestic supplies in Canada and the strong U.S. dollar.

Record U.S. supplies and the lowest prices in about 30 years supported a 23-percent jump in U.S. pork exports to 399,000 tons. However, the value of pork exports dropped 2 percent to slightly more than $1 billion. The average export unit value for pork shipments plunged 20 percent to $2,576/ton in 1998 from $3,218/ton in 1997.
Pork exports surpassed the previous year's level for five of the seven largest U.S. markets, with Canada and Korea being the exceptions. U.S. exports to Japan, the world's largest pork importer, rose 7 percent to 174,000 tons. Mexico was a strong market as exports jumped 73 percent to over 51,000 tons.

Despite the toll of the Russian financial crisis on the U.S. poultry industry, a 27-percent slide in exports to Russia, overall poultry meat shipments were only down 2 percent. Lower broiler meat prices actually induced double-digit gains in imports by some of the smaller markets in Latin America, the Caribbean, and the Middle East, allowing broiler meat exports to inch past their 1997 record.

Pressured by low leg quarter prices, which tumbled 50 percent since the devaluation of the Russian ruble in August 1998, the total value of poultry exports slipped 10 percent to $2.2 billion. Lackluster turkey exports, down 26 percent in both volume and value, contributed to this slide in overall value of poultry exports.

U.S. whole cattle hide exports suffered as slow Asian demand dropped total export revenues 23 percent to $871 million. Exports to Korea, a market that accounts for one-third of U.S. hide exports, dropped 35 percent. Hide prices consequently dropped sharply. In response to low prices, other countries boosted imports of U.S. hides, and total U.S. shipments dropped only 10 percent to 18 million pieces.

After dropping 15 percent in 1997, U.S. exports of tallow and grease rebounded 33 percent. This recovery came as exports gained strength in Mexico and Korea as well as in Central and South America. These gains were partially offset by decreases in Turkey and Venezuela. Exports to the European Union increased 10 percent. Higher palm stearin prices helped strengthen exports to the Asian market and higher fishmeal prices helped increase exports to Central and South America.

In 1998 U.S. variety meat exports increased 5 percent, while the average export value decreased by the same percent. Exports to Japan and Taiwan were up year-to-year while exports to Mexico, Russia, Egypt, and Hong Kong were down. Variety meat exports are still in a state of recovery since demand was dampened in 1997 by food safety concerns.

Outlook for 1999:

Supported by strong shipments of red meat, 1999 exports of red meat and poultry are expected to jump 9 percent. While economic uncertainty in Russia is forecast to induce a further slide in poultry meat shipments, beef and pork food aid shipments will support U.S. meat exports. Better U.S. domestic demand, lower slaughter rates, and increased Korean imports of U.S. cattle hides should increase hide prices to more profitable levels during the second half of 1999. Tallow exports are expected to drop in 1999 as prices for competing oils decline.

Volume and Value of U.S. Meat and Product Exports, 1990, 1997-1998
Exports	1990	1997	1998	% Ch.	1990	1997	1998	% Ch.
	1,000 MT			1998/97	$1,000			1998/97
Beef	348	692	714	3%	$1,580	$2,497	$2,326	-7%
Pork	82	325	399	23%	$327	$1 ,046	$1,028	-2%
Poultry Meat	596	2,585	2,537	-2%	$673	$2,423	$2,176	-10%
Variety Meats	228	424	448	5%	$361	$595	$596	0%
Total Meat	1,253	4,026	4,098	2%	$2,941	$6,561	$6,126	-7%
Cattle hides (pieces)	28,321	22,047	20,544	7%	$1,459	$1,256	$960	-23%
Tallow and Grease	1,074	944	1,257	33%	$366	$450	$553	23%
Total	na	na	na	na	$4,765	$8,267	$7,646	-8%

Last modified: Friday, May 02, 2003

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Last modified: Friday, May 02, 2003