USDA Bi-Weekly International Meat, Poultry & Egg Review
21 March 2016
International Trade Highlights: U.S. exports of chicken leg quarters were down in 2015 in comparison to the prior year. As shown by the graph, export and domestic prices decreased while U.S. cold storage increased. Domestic leg quarter inventories at the end of the year were 4.0 percent lower compared to earlier in the year but were up 29.0 percent when compared to the same time period in 2014. December, 2015 experienced the lowest domestic price for leg quarters (12.03 cents/lbs.) since July, 2002 when leg quarters were 11.16 cents/lb. December also showed the lowest export prices of leg quarters (31.62 cents/lbs.), since January, 2007 when leg quarters were 28.9 cents/lb. Throughout 2015, exports of chicken products were down 13.0 percent in volume and 26.0 percent in value in comparison to the prior year. As for leg quarter exports, volume was 18.0 lower than 2014. Mexico, Angola and Cuba are the largest importers of U.S. leg quarters. Last year, Mexico increased U.S. leg quarter imports 3.04 percent, pushing them into first place in 2015, from second place the year before. The country’s demand for leg quarters remains strong. Facing increasing food prices, Mexico’s Secretariat of Economy amended a trade authorization in December, 2015 to allow the country to import more poultry meat duty-free. Mexican authorities have gone so far as to say the amendment is more about keeping domestic poultry prices in check by allowing imports as necessary but as long as it doesn’t affect domestic production. For these reasons, leg quarter exports to Mexico remained steady despite a strengthening dollar. Angola was the U.S.’s largest leg quarter trading country in 2014 and dating back to 2012. In 2015, the country imported 40.0 percent less volume and 60.0 percent value than the year before. Angola’s scale-back was largely affected by changes in their trading policies. Once a free import market, Angola transitioned into a quantitative control system last year by instituting a new quota system in January, 2015. After the Ministry of Commerce announced new import quotas on only 14 agricultural products, all import licenses were revoked and required to adhere to the new quotas. Licenses for imported poultry were revoked but not addressed in the new quotas. As a result of this import halt, prices of leg quarters have reportedly risen more than 100.0 percent on the informal market. In a notice released by the Angolan government, restricting imports is an effort towards self-sufficiency where domestic supply provides more than 60.0 percent of the national consumption. This change in policy impacts approximately $157.6 million in U.S. leg quarter exports. Cuba moved from its position as the fourth largest leg quarter market in 2014 to the third in 2015. This increase in market share was due to Russia dropping out of the market and not an increase of exports to Cuba. Exports fell 22.0 percent in 2015 after a record-setting in year in 2014, making up 49.0 percent of all U.S. agricultural exports to that country. The recent decline in exports is largely attributable to increased competition from countries who are able to provide export credits to the Cuban import authorities, mainly the E.U and Brazil. Currently, U.S. exporters cannot offer terms of credit, and exports to Cuba must be purchased using cash or third parties and are barred from providing other trade-building assistance. This is expected to change as trade terms between Cuba and the U.S. develop.
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