US pork exports to China were high in January
US pork exports were the second-highest on record in January, both in volume and value, according to data presented by USDA and compiled by US Meat Export Federation. In total, the US pork producers have shipped abroad 273,603 tonnes of pork (+36% y-o-y) worth $738.7 million.
Supported by the first signs of stress relief in trade between the US and China, shipments to China and Hong Kong reached 97,002 tonnes, up 263% from a year ago. However, in January 2019, US pork exports to China were subject to a 45% duty imposed as retaliation in the trade war between the two parts.
In January 2020, the Phase One trade deal set that China had agreed to purchase $40 billion to $50 billion worth of US agricultural goods, including pork, to end the trade war. However, at the end of the month, the coronavirus outbreak and the lockdown imposed for 11 major cities had a real impact on trade. "The first quarantine actions in China were taken in late January and the calendar had turned to February before coronavirus became a major health concern in countries such as South Korea and Japan. But despite logistical challenges, a severe decline in tourism and a notable impact on sit-down dining, the overall demand for red meat in these markets is quite resilient. Retail meat sales have remained strong and both retailers and restaurateurs are utilizing e-commerce and delivery services at unprecedented levels. While it’s definitely a challenging situation, the Asian food industry is adapting to these conditions and finding creative ways to accommodate consumers," said Dan Halstrom, USMEF President and CEO.
Since the beginning of March, Chinese authorities have reported recent figures that seem to suggest that the spread of the coronavirus (Covid-19) has slowed down. Nevertheless, analysts are expecting the virus outbreak in China to extend beyond Q1 2020. "The entire F&A chain will still need at least four months to return to a full resumption of operations in China, with the lingering impact likely to continue for longer," said Ping Chew, Head – RaboResearch F&A Asia, Rabobank.
That is cooling down optimistic perspectives for trade between the US and China for the next couple of moths, considers another Rabobank analyst. "Coronavirus outbreak has hampered the feed flow domestically in China. A lot of the challenges as a result of coronavirus, we believe, is in the short term in the first half of this year is really going to be the driver that’s reducing the demand for US exports to China. Once China starts to get a handle on the coronavirus, in the second half of 2020 we’re going to see growth and trade flow to China. Meat prices and meat production in China are struggling because of the coronavirus," considers Erin Fitzpatrick
Last week, USDA announced that China has continued its progress in implementing the agreement by lifting a ban on beef and beef products from animals older than 30 months. That will open the market for American beef producers, already disadvantaged by a ban placed on hormone-growth beef.
The main markets for US beef in Asia are Japan (25,205 tonnes exported in January) and South Korea (17,794 tones), both showing a decline of 3% and 1%, respectively, followed by Taiwan (5,226 tonnes), with an increase of 24% in volume. "The Taiwanese market is a remarkable success story for U.S. beef, especially for a country with fewer than 25 million residents. By introducing a wider range of cuts, the US industry and its importers and customers are finding new ways – including exciting new retail packaging and merchandising techniques – to capitalize on growing demand in Taiwan and make US beef available to more and more consumers," added Mr. Halstrom.
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