Beef Exports (again) a Key Factor to Watch in 2020
– Josh Maples, Assistant Professor & Extension Economist, Department of Agricultural Economics, Mississippi State University
The latest Monthly Trade data for November 2019 was released by USDA Economic Research Service last week. The report continued the recent trend of lower monthly exports as compared to 2018. After three consecutive years of double-digit increases (2016-2018) in beef exports, current data show January-November 2019 exports to be down 4.6 percent compared to the same period in 2018. There are also new and hopeful trade deals to add to the mix with Japan, Canada, Mexico, and China. Needless to say, there are plenty of moving parts for 2020.
November 2019 beef exports were 8 percent below the same month of 2018 at just under 245 million pounds. For January-November 2019, exports to four of the top five destinations were lower (Japan, Mexico, Canada, Hong Kong) with the exception of South Korea which is up 6.3 percent. Japan is still the top destination for U.S. beef though the gap between first and second place narrowed. Through November 2019, 26.5 percent of U.S. beef exports went to Japan and 22.6 percent went to South Korea. In 2018, 28 percent of beef exports went to Japan and 20.2 percent went to South Korea. Exports to Mexico (14.1 percent of total) and Canada (8.8 percent of total) are below year-ago levels but are tracking near their respective export shares for 2018. Exports to Hong Kong meanwhile are down 23 percent through November and the share of total exports was only 7.5 percent compared to 10 percent in 2018.
It is important to note that 2019 was not at all a “bad” year for beef exports. Even with the decline from 2018, it will still very likely go down as the second-largest beef export year on record. The 3.02 billion pounds of 2019 beef exports projected by the monthly USDA World Agriculture Supply and Demand Estimates (WASDE) would trail only the 3.16 billion pounds exported in 2018.
On the trade agreement front, the bilateral trade deal with Japan will lower tariffs on U.S. beef and has the potential to slow the decline in U.S. market share in Japan. The expected agreement with Canada and Mexico (USMCA) would also remove uncertainty about the future of trade with those countries. Though exports to China are only one percent of US total beef exports, the increasing reports that a Phase 1 trade agreement with China will be reached could also alleviate market uncertainty across many products. Put it all together and the trade agreement news for beef has been positive in recent months.
Where does that leave us for 2020? It leaves us with plenty of questions! Beef exports are generally expected to be strong in 2020. The latest WASDE projection for 2020 beef exports is 3.3 billion pounds which would be a new record and about 9 percent above 2019 levels. But the recent declines and the impact of new and expected trade deals should make exports in 2020 interesting to track.