Beef exports (again) a key factor to watch in 2020

By 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. 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% 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% 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%. Japan is still the top destination for U.S. beef though the gap between first and second place narrowed. Through November 2019, 26.5% of U.S. beef exports went to Japan and 22.6% went to South Korea. In 2018, 28 percent of beef exports went to Japan and 20.2% went to South Korea. Exports to Mexico (14.1% of total) and Canada (8.8% 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% through November and the share of total exports was only 7.5% compared to 10% 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 U.S. total beef exports, the Phase One trade agreement with China 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% above 2019 levels. But the recent declines and the impact of new and expected trade deals should make exports in 2020 interesting to track.

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