Soaring domestic prices for U.S. beef and pork clearly depressed exports during 2014 and 2015. Beef imports also surged during that period due to the big red meat production shortage, especially in early 2015. The elevated value of the U.S. dollar also exacerbated the situation by boosting the cost of American products to export customers and reducing the relative price of meat from foreign competitors to both domestic and international buyers.
The situation is changing, with the surging U.S. cattle population beginning to increase domestic beef production and forcing prices downward. The chart above reflects these shifts, showing imports have fallen significantly below the peak levels seen during the second quarter of 2015. The February 2016 total at 232.1 million lbs. fell 54.9 million and 22.3 million lbs. below comparable month and year-prior levels, respectively. We should expect that trend to continue, especially with the value of the U.S. dollar having declined significantly in early 2016. News that Australian producers are actively culling their herds and cutting beef output also implies diminished supplies available on foreign markets, as well as higher international prices.
U.S. beef exports hit a major peak at 272.2 million lbs. in July 2011 and have posted lower highs since mid-2013. Again, the downtrend clearly reflected cyclically tight domestic conditions through early 2015, as well as the elevated value of the dollar. But recent lows have exceeded the apparent bottom posted in January 2015, thereby suggesting the price breakdown experienced during the second half of the year and the lower prices posted in the fourth quarter are encouraging renewed interest from export customers.
The magenta line on this chart represents total monthly U.S. beef exports, with the February 2016 total, at 172.3 million lbs. topping the lows posted in January and September of last year. The blue, red and green lines illustrate sales to three of the 'big four' U.S. trade partners (with Canada being the other). Those show South Korean buying has been edging higher, whereas sales to Japan and Mexico have diminished in recent months. We have to suspect those totals, particularly the Mexican results, reflect the impact of higher U.S. prices. Recent peso losses to the dollar are probably slowing sales as well. These totals will probably increase as U.S. beef prices decline cyclically during the months and years ahead.
In contrast to the current situation in which the U.S. finds itself a net beef importer, it's a major pork exporter. That was not always the case, but the trade balance seemingly shifted permanently to the export side in 1995. The following chart shows U.S. pork exports reached 386.3 million lbs. in February, which slightly exceeded the January total while topping the comparable 2015 result by 9.5 million. The chart indicates exports fell to a cyclical low in September 2014 and have worked higher in the interim. We should probably expect the usual spring surge to carry monthly sales substantially higher. Indeed, relatively low hog and pork prices, as well as recent U.S. dollar slippage might push the spring peak to a five-year high.
The chart also shows monthly pork imports have been working slowly higher since 2012. The blue line also depicts very limited volatility in those totals. They may continue climbing slightly over time, especially if the recent U.S. dollar slide proves temporary. Canada is clearly the dominant pork exporter to the U.S.
The chart below illustrates total U.S. pork exports, along with the amounts sent to China and Hong Kong, Japan and Mexico. The Chinese totals are clearly falling far short of the peak numbers reached in 2008 and 2011, but they are also climbing from the depressed results posted in early 2015. Recent sales to Japan and Mexico have trended modestly lower, with Mexico having emerged as the largest U.S. pork customer in the past 18 months.
As in the beef market, we expect U.S. pork exports to accelerate during the months and years ahead, due largely to ideas that domestic producers will persistently tend to expand their herds. Cheaper feed costs, as well as recent U.S. dollar slippage, also suggest lower hog and pork costs to domestic and export customers. Late reports of planned packing industry expansion also suggest a larger hog/pork industry in the years ahead, which in turn suggests a commensurate increase in pork exports."