International meat trade moderates increased U.S. meat production

U.S. meat exports continued to grow year over year in the latest trade data for August with beef exports up 29.5 percent from last year, along with pork exports up 11.4 percent and broiler exports up 16.7 percent. Additionally, beef imports were down 16.0 percent in August while cattle imports were down 18.0 percent compared to one year ago.

Total U.S. red meat and poultry production in 2016 is projected to increase 2.7 percent over 2015 levels. However, nearly half of that increase is expected to move off-shore with net meat exports projected to increase 11.5 percent compared to 2015. This will hold domestic meat consumption to a projected 1.3 percent year over year increase. Beef leads the way in 2016 with production projected to increase roughly 4.6 percent over year ago levels. In terms of quantity, the U.S. will continue to be a net beef importer in 2016 but a nearly 60 percent decrease in net beef imports will limit domestic beef consumption to a projected increase of 1.7 percent year over year.

Beef exports to Japan were up 43.1 percent in August with a year to date total up 12.1 percent compared to last year. Beef exports to South Korea were up 70.4 percent in August and are up 26.9 percent for the first eight months of 2016 compared to one year ago. August beef exports to Mexico were up 30.3 percent year over year with a year to date total up 12.3 percent. Beef exports to Hong Kong were up 35.6 percent in August but remain 6.6 percent below 2015 for the year to date. Among major U.S. beef export destinations, only Canada was down with a 14.3 percent decrease in August and 9.7 percent lower total for the year to date.

Beef imports from Australia continued sharply lower with a 50.7 percent year over year decrease in August and a year to date total down 34.1 percent from 2015. Beef imports from New Zealand were down 22.8 percent in August and are down 6.2 percent for the first 8 months of 2016 compared to one year ago. Imports of beef from Mexico continue strong with August up 31.0 percent resulting in year to date imports up 10.4 percent year over year. Beef imports from Canada were also up 14.7 percent and are up 14.1 percent for the year to date compared to last year.

Among the minor markets for U.S. beef imports, Nicaragua was up 256.2 percent in August, though the year to date total remains down 6.2 percent compared to one year ago.

It is possible that the August jump in beef shipments from Nicaragua is a move to capture more of the "Other Countries" share of the U.S. tariff rate quota (TRQ) before Brazil began shipments of fresh/frozen beef to the U.S. Imports of Brazilian beef will also fall under the Other Countries portion of the beef import TRQ which amounted to 8.7 percent of the total TRQ for all countries in 2015. Those shipments began in late September and may show up as modest year over year increases in beef imports from Brazil in the fourth quarter.

Beef imports from Brazil were up 9.1 percent in August but remain 22.0 percent below last year for the year to date. However, the impact of more Brazilian access to the U.S. beef market is expected to be limited.

For the year to date, Brazil represents 4.1 percent of total beef imports while Nicaragua is another 3.2 percent. Imports of fresh/frozen beef from Brazil will compete economically with other import sources such as Nicaragua, Australia and New Zealand.

Thus, not only are Brazilian beef imports limited by the TRQ but will also likely partially substitute for other beef imports limiting the impact on total beef imports.