The August International Trade report on Wednesday showed US pork exports totaled 390 Mil Lbs during the month of July, a sharp 58 Mil Lb (13%) drop from June, and the 2nd consecutive month of sharply lower trade. Pork exports typically decline through the summer months as US pork prices seasonal increase, though this year’s decline was much larger than normal as US pork prices traded to much higher than expected levels. This was also the largest decline in July exports on record. While pork shipments fell sharply, the July WASDE report increased the forecast for annual exports by 6 Mil Lbs to 5,753 Mil Lbs. The July trade data is a disappointment, but the current pace for annual exports is still on track to reach the USDA’s forecast. No significant changes to their estimate is expected until October, when the August trade data, as well as the September inventory data are available.
Beef exports in July totaled 239 Mil Lbs, fractionally better than June and 10% larger than a year ago. This was also the largest July export figure in 4 years and the 3rd largest on record. The USDA in the July WASDE report slightly lowered their export forecast by 32 Mil Lbs, though the annual forecast is still 9% over last year and if realized 2017 beef exports will be close to the record export pace that was set in 2011. The chart plots monthly estimates for the rest of the year that are needed to reach the USDA forecasts. While annual exports are projected to increase significantly, the forecast for the 4th quarter is down 2% from a year ago. The current export pace this year is on track to reach the USDA forecast, but with record beef production expected in the 4th quarter, we think that the USDA could still be underestimating Oct-Dec exports.
While beef exports have improved in the last 3 months, imports have also increased on a counter seasonal basis, and also remained well above the export rate. July imports were at 302 Mil Lbs, the largest monthly total of this year and the largest July import total in 10 years. Imports from Canada, Australia, and New Zealand were each over 70 Mil Lbs in July, while imports from Mexico were the largest of the year at 53 Mil Lbs. And, while the US put a stop to fresh beef imports from Brazil, frozen products continue to flow into the US. Imports from Brazil totaled 11 Mil LBs, imports from Uruguay were at 12 million, and Nicaragua consistently sends 10 Mil Lbs of beef each month. Cumulative imports for the year are at 96% of a year ago and at a 3 year low, and hopefully the import trend turns down. The last thing that the US beef and cattle markets need is more supply.