USDA Bi-Weekly International Meat, Poultry & Egg Review
27 July 2015
International Trade Highlights: Recently, the U.S. Customs and Border Protection (CBP), a division of the Department of the Homeland Security, released the most current data on U.S. beef imports under a tariff rate quota (TRQ). According to the numbers, as of July 20, 2015, U.S. beef imports subject to a TRQ equaled 551,581 MT, which was 21.3 percent more than the same period a year ago. Imports of beef from Australia equaled 221,598 MT, which was 57.1 percent higher over the same period a year ago. This filled 58.6 percent of the TRQ, compared to 37.3 percent last year. Beef imports from New Zealand were 15.8 percent more than last year, amounting to 142,437 MT. This filled 66.7 percent of Australia’s TRQ, up from 57.6 percent a year ago. Imports of beef from Canada, which do not fall under a TRQ, totaled 104,210 MT. This was 1.6 percent higher than a year ago. Beef imports from Mexico, which also are not under a TRQ, were 16.9 percent lower than last year, amounting to 44,886 MT. Beef imports from Uruguay were unchanged from a year ago, totaling 10,003 MT. This filled 50.0 percent of the country’s TRQ, unchanged from last year. Imports of beef from Argentina continued to be banned due to foot and mouth disease (FMD). The weekly report is available on the CBP website at http://www.cbp.gov/trade/quota/commodity-graph-report.
North America: Recently, CanFax released Canada’s current cattle on feed numbers for terminal feedlots with 1,000 or more head in the provinces of Alberta and Saskatchewan. According to the data, on July 1, 2015, Canada’s cattle on feed totaled 750,165 head. This was 5.6 percent lower than one year ago and was 3.4 percent lower than the five year average. Cattle placed on feed during June equaled 73,666 head. This was up 7.4 percent over one year ago and was up 14.4 percent over the five year average. Steers placed on feed totaled 45,092 head, which comprised 61.2 percent of the total. Heifers placed on feed totaled 28,574 head. More specifically, placements of feeder cattle weighing less than 600 pounds equaled 3,066 head, which was 136.6 percent more than last year. Placements of feeders weighing 600 to 699 pounds totaled 5,844 head, 94.4 percent higher than a year ago. Placements of feeder cattle weighing 700 to 799 pounds increased 39.3 percent over last year to 10,093 head. Feeder cattle placements weighing more than 800 pounds totaled 54,663 head, which was 4.2 percent less than last year. In the meantime, Canada’s fed cattle marketings during June totaled 124,522 head. This was 10.0 percent lower than one year ago and was 16.2 percent less than the five year average. To obtain the entire report, go to the CanFax website at http://www.canfax.ca/.
On July 22, USDA NASS released its monthly Cold Storage report. According to the data, as of June 30, 2015, beef in U.S. cold storage facilities equaled 467.1 million pounds. This was 30.4 percent more than the previous month and 6.6 percent more than the five year average. Specifically, the volume of boneless beef in cold storage totaled 429.7 million pounds, which was 34.1 percent above a year ago. Beef cuts in storage were 1.0 percent lower than a year ago, amounting to 37.4 million pounds. Meanwhile, as of June 30, U.S. pork in cold storage equaled 632.2 million pounds, which was 17.6 percent above the previous month and was 19.6 percent above the five year average. More specifically, hams in storage totaled 180.7 million pounds, 42.8 percent above a year ago. Pork bellies in storage numbered 44.5 million pounds, which was 47.0 percent lower than last year. The volume of loins in cold storage was up 35.7 percent from a year ago, amounting to 37.4 million pounds. Pork ribs in storage totaled 73.2 million pounds, which was 22.2 percent higher than last year. Butts in storage equaled 22.0 million pounds, 10.1 percent above last year. The volume of pork trimmings in storage were 8.3 percent above a year ago amounting to 47.2 million pounds. Veal in U.S. cold storage facilities on June 30 equaled 3.2 million pounds, which was 4.2 percent less than last year. Lamb and mutton in storage totaled 36.8 million pounds, 18.3 percent greater than a year ago. The complete report is available on the NASS website at http://www.nass.usda.gov/.
According to data from the USDA Livestock, Poultry and Grain Market News (LPGMN), the Federally Inspected Red Meat Production for week ending July 11, 2015 was 899.6 million pounds which was 20.6 percent higher than a year ago and 11.2 percent higher than two years ago. Total meat production for the year equaled 24,579.3 million pounds. This was 1.7 percent greater than a year ago. Beef production for the week of July 11, 2015 totaled 457.3 million pounds, which was up 16.1 percent over the previous year. For the year, beef production equaled 11,957.3 million pounds, 3.4 percent lower than last year. Pork production for the week of July 11, 2015 rose 25.9 percent over a year ago to 438.1 million pounds. For the year, pork production equaled 12,506.0 million pounds, which was 7.3 percent greater than last year. Lamb and mutton meat production for the week ending July 11, 2015 totaled 2.7 million pounds, which was up 8.0 percent over last year. For the year lamb and mutton production equaled 74.5 million pounds, which fell 4.4 percent from a year ago. To obtain the weekly reports, visit the LPGMN website at http://www.ams.usda.gov/mnreports/sj_ls711.txt.
On July 23, the USDA National Agricultural Statistics Service (NASS) released its Livestock Slaughter report. According to the data, during the second quarter of 2015, U.S. cattle slaughter totaled 7.12 million head. This was 3.9 percent more than the previous quarter but was 7.8 percent less than a year ago. During the second quarter, U.S. beef production rose 3.5 percent over the previous quarter to 5.78 billion pounds. However, this was 5.3 percent lower than a year ago. At the end of June, the average live cattle weight was 1,332 pounds, 23 pounds heavier than a year ago. During the first half of 2015, U.S. total cattle slaughter equaled 13.97 million head. This was 6.7 percent less than last year. Beef production during the first half of the year was 4.4 percent lower than a year ago, amounting to 11.37 billion pounds. In the meantime, during the second quarter, U.S. hog slaughter totaled 27.66 million head. This was 3.1 percent lower than the previous month but was 8.9 percent higher than a year ago. U.S. pork production during the second quarter fell 3.9 percent from the previous quarter to 5.89 billion pounds. This was 7.6 percent more than a year ago. At the end of June, the average live weight for a hog equaled 282 pounds, three pounds lighter than a year ago. During the first half of the year, hog slaughter totaled 56.20 million head, 7.4 percent more than a year ago. First half pork production was 7.1 percent higher than a year ago, totaling 12.02 billion pounds. Meanwhile, during the second quarter, U.S. sheep and lamb slaughter equaled 504.6 thousand head. This was 2.4 percent more than the previous quarter but was 9.2 percent less than a year ago. Lamb and mutton production during the second quarter equaled 36.2 million pounds, which was up 2.5 percent over the previous quarter but was down 8.8 percent from a year ago. During the first half of the year, total sheep and lamb slaughter equaled 997.5 thousand head, which was 5.4 percent lower than a year ago. First half lamb and mutton production totaled 71.5 million pounds, 4.5 percent less than a year ago. U.S. goat slaughter during the second quarter of 2015 equaled 109.4 thousand head. Although this was up 7.9 percent over the previous quarter, it was down 13.0 percent from a year ago. Goat slaughter during the first half of 2015 was down 7.9 percent from a year ago, amounting to 210.8 thousand head. The entire monthly Livestock Slaughter report is available on the NASS website at http://www.nass.usda.gov/.
South America: Argentina & Mercosur Trade Update
ARGENTINA & MERCOSUR TRADE RELATIONS: Mercosur member countries (Argentina, Brazil, Paraguay, Uruguay and Venezuela) and associate countries (Chile, Bolivia, Peru, Colombia and Ecuador) have been involved in numerous trade meetings between December 2014 and July 2015. Most recently Mercosur held its 48th Summit meeting in Brazil where the current chair (Brazil) handed over the reins to Paraguay, which is significant since Paraguay was suspended from the group in 2012 due to political issues involving the impeachment of then president Fernando Lugo. It is also significant because Paraguay will be leading important free trade agreement (FTA) negotiations between Mercosur and the EU in late 2015.
The ongoing trade negotiations between Mercosur and the EU were an important topic at the 48th Summit meeting, as well as the incorporation of Bolivia as a full member (barring favorable congressional approval from Paraguay and Brazil); the push by some members (Brazil, Paraguay, and Uruguay) for more flexibility in trade allowing individual countries to make bilateral treaties with third parties, which is currently banned by a resolution from 2000 requiring full member consensus; and many other topics.
As it stands after several meetings between Mercosur and the EU over the past 7 to 8 months with the most recent being in early June 2015 in Brussels, each member country will put together a list of goods and services to be considered for tariff reductions for the ongoing Mercosur-EU FTA negotiations. These lists will be discussed at another Mercosur meeting (possibly September 2015) ahead of negotiations with the EU in third quarter 2015 (November 2015) when Mercosur and the EU will present their lists to each other. Of the group, Argentina is struggling most to put together a list as it has a history of domestic protectionism and restrictive import barriers. Several EU members are also struggling to put together a list of goods and service as they fear competition from Mercosur countries in regard to agriculture, especially since the EU has been lagging behind in job creation. Despite this it sounds as though all parties (EU and Mercosur) are open to a two-speed agreement that would either allow Mercosur countries to individually negotiate with the EU or allow the list to be progressive meaning some items would see reduced tariffs immediately while other items would realize reduced tariffs specified years down the road.
At this rate an FTA between Mercosur and the EU is not likely to conclude until 2016. Negotiations between Mercosur and the EU officially began in 1999, but were officially relaunched in May 2010 at a summit in Madrid. According to some sources, Mercosur is the EU’s 8th most important trade partner accounting for about 3% of the EU’s total trade. Whereas the EU is Mercosur’s largest trade partner accounting for about 20% of total trade. This FTA would ensure preferential access and boost Mercosur economies, which would be greatly helpful to member countries, especially Brazil who is going through some tough economic times. Other trade negotiations have taken place over the last 7 to 8 months to expand and diversify trading between Uruguay and India, Mercosur and the Pacific Alliance, Argentina and Canada, Argentina and SICA (Central American Integration System), and Argentina and China.
ARGENTINA’S POULTRY PRODUCTION: Official USDA FAS forecasts expect Argentine broiler production to increase 2.4% in 2015 to reach 2.1 million metric tons (MMT) compared to 2014 (2.05 MMT). As of 2014, Argentina ranked 8th in world broiler meat production following the US, China, Brazil, EU, India, Mexico, and Russia. Argentina’s broiler industry is vertically integrated and has become increasingly modern with improvements, expansions, and equipment upgrades allowing for increased production efficiency, excellent product quality, product standardization and tight traceability. However production costs, especially feed, energy, and labor have dramatically increased due to inflation having a direct impact on producer margins. About 80% of total production is processed at 58 federally inspected plants. The rest of the producers are smaller companies approved and controlled by provincial authorities that primarily sell locally and are not approved to export. Most companies are domestically owned and receive no foreign investment.
ARGENTINA’S POULTRY CONSUMPTION: The last forecast by USDA FAS estimated domestic broiler meat consumption to remain at 41 kg per capita in 2015, which is unchanged from 2014. Domestic consumption seems to be close to a saturation point both in broiler and animal proteins in general and the 2014 economic recession and high inflation impacted consumer purchasing power resulting in a slowdown in consumption from the previous upward trend in domestic consumption. Argentines consumers continue to be the world’s leading beef consumers in the world. Of the estimated 114 kg per capita of animal protein 64 kg is beef, 41 kg chicken, and 9 kg pork. Consumers prefer large whole broilers, however poultry processors are shifting towards more broiler parts and further processed value added products such as pre-cooked meals, frozen chicken meals, chicken nuggets, and chicken burgers.
ARGENTINA’S POULTRY TRADE: Argentine imports are negligible, mainly products for the pharmaceutical industry. Due to the strong import restriction system imposed by the government of Argentina, USDA FAS forecasted 2015 imports at 1,000 MT, unchanged from 2014 estimates. Exports of Argentine broiler meat, not including chicken paw exports (China and Hong Kong), are officially projected to reach 275,000 metric tons, slightly lower than 2014 estimates (278,000 MT). Argentina continues to expand their export markets, especially to Russia after it banned food imports from the US, EU, Australia, and Canada in 2014 over diplomatic disputes regarding Ukraine. In 2014, Venezuela was Argentina’s largest export market, accounting for 41% of Argentina’s total exports. Other significant export markets include South Africa, China, and Russia. In 2014, it was estimated that total export volumes were as follows: 61% whole chickens, 2% breasts, and 2% leg quarters with the balance of exports being other products. Argentine paw exports were estimated to remain at 29,000 MT in 2014, similar to 2013 levels. The main markets for Argentine paws are China and Hong Kong. Sources: News Wires/Senasa/AliceWeb Mercosul/USDA FAS Gain Report “Argentina Poultry and Products Annual” September 3, 2014/USDA FAS, PSD Online, Official USDA Estimates/Livestock & Poultry: World Markets & Trade, April 2014, Foreign Agricultural Services/USDA Office of Global Analysis
Pacific Rim: The Korea International Trade Association (KITA) recently issued South Korea’s beef and pork import data for June 2015. According to the numbers, South Korea’s beef imports during June rose 1.5 percent over the previous month and 6.8 percent over June 2014 to 23,964 MT. More specifically, imports of frozen beef totaled 19,943 MT, which accounted for 83.2 percent of the total. Imports of fresh, chilled beef totaled 4,021 MT, of which Australia had a 66.6 percent market share. During June, South Korea imported 14,896 MT of beef from Australia, which was up 10.3 percent over the previous month and was up 18.2 percent over June 2014. During the first half of 2015, South Korea’s beef imports from Australia equaled 80,616 MT, which was 7.9 percent more than a year ago. Australia was the primary source for South Korea’s beef imports with 57.9 percent of the total. South Korea’s beef imports from the U.S. during June totaled 7,573 MT. This was 8.3 percent less than the previous month and was 3.3 percent less than June 2014. Year-to-date beef imports from the U.S. were 7.6 percent lower than last year, amounting to 46,714 MT. The U.S. was South Korea’s second largest beef import market with 33.5 percent of the total. Beef imports from New Zealand during June fell 24.7 percent from the previous month to 1,236 MT. Also, this was 28.3 percent lower than June 2014. Year-to-date beef imports from New Zealand totaled 10,011 MT, which was 13.9 percent less than a year ago. Overall, during the first half of 2015, South Korea’s total beef imports equaled 139,326 MT, nearly one percent above the same period a year ago. Meanwhile, during June, South Korea imported 36,360 MT of pork. Although this was 10.4 percent lower than the previous month, it was 51.3 percent higher than June 2014. South Korea’s pork imports from the U.S. during June fell 5.9 percent from May but rose 71.9 percent from June 2014 to 14,323 MT. During the first half of the year, South Korea imported 74,519 MT of pork from the U.S., which was 20.7 percent above last year. The U.S. was the leading pork import market for South Korea with 32.4 percent of the total. During June, South Korea imported 5,101 MT of pork from Germany. This was down 27.7 percent from the previous month but was up 25.8 percent over June 2014. Total year-to-date pork imports from Germany were 54.5 percent more than a year ago, amounting to 39,488 MT. Germany was the second largest market for South Korea’s pork imports with 17.2 percent of the total. Pork imports from Spain during June totaled 2,774 MT, which was 33.9 percent lower than the previous month but was 62.5 percent higher than June 2014. Year-to-date pork imports from Spain totaled 29,741 MT, 139.8 percent higher than a year ago. Overall, during the first half of 2015, South Korea’s total pork imports equaled 229,666 MT, which was 35.3 percent above the corresponding period a year ago. To obtain further data on South Korea’s trade, go to the KITA website at http://www.kita.org/.
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