Author: Andrew Muhammad

Despite record beef exports in 2022 ($11.7 billion), there are signs of weakening beef trade for the U.S. in 2023. Note that total U.S. beef and beef product exports year-to-date (January-March) in 2023 were down in terms of value by 22% when compared to the same period in 2022, and down 8% in terms of volume. This overall decline was primarily driven by declines in sales to Asian markets, most notably the leading destinations for U.S. beef exports: Japan, South Korea, and China. In terms of value (volume), U.S. beef exports to Japan were down 20% (4%), South Korea 36% (15%), and China 21% (15%) (USDA, 2023). A noted reason for these declines is the relatively strong U.S. dollar, which has made beef exports relatively more expensive, and recent and anticipated declines in U.S. beef production.

In previous SAT articles, I highlighted the rise of China as a major buyer of U.S. beef and a major beef importing country overall. As mentioned in these articles, China emerged from relative obscurity and is now the third leading market for U.S. beef behind Japan and South Korea. In 2022, China imported $2.2 billion dollars of U.S. beef and beef products, with sales comparable to well established foreign markets: South Korea ($2.7 billion in 2022) and Japan ($2.3 billion in 2022). Unfortunately, the trade data for 2023 indicate that U.S. beef may be losing ground in the Chinese market. Figure 1 shows China’s beef imports from the U.S., as well as from all countries in 2022 and 2023 (January – March). Even as U.S. beef exports to China declined in the first quarter of 2023 from $382 million to $344 million (or 40 thousand to 38 thousand metric tons), China’s beef imports overall increased by more than $100 million and nearly 103 thousand metric tons. According to Trade Data Monitor® (2023), China imported 125% more beef from Brazil during this period (124 thousand metric tons in the first quarter of 2022 versus 280 thousand metric tons in 2023). Foreign demand for U.S. beef demand will remain a significant concern going forward as declining beef production could put even more pressure on U.S. beef prices. It appears that this is having and will continue to have a negative impact on U.S. beef exports overall and in China in particular.

Figure 1. China’s beef and beef product imports in 2022 and 2023: YTD (January – March)

References

USDA (2023). Global Agricultural Trade System. https://apps.fas.usda.gov/gats/default.aspx

Trade Data Monitor® (2023). https://www.tradedatamonitor.com/

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Muhammad, Andrew. “U.S. Beef Exports Down in 2023 (so far) – U.S. Beef is Losing Ground in China.” Southern Ag Today 3(20.4). May 18, 2023. Permalink

Woody biomass now accounts for a major share of renewable energy in the European Union (EU) and United Kingdom (UK) due to recent climate and renewable energy policies. Imports of wood pellets – often used in converted coal fueled power plants – in the EU and UK have reached record levels, with imports mostly coming from the southeastern region of the U.S. Consequently, wood pellets are now the leading forest-product export for the U.S., surpassing oak lumber, pine lumber, and other major exports (USDA, 2023). This article is not about the efficacy of European climate policy or the use of woody biomass in reducing carbon emissions. The overall goal of this article is to simply document the phenomenal rise in U.S. wood pellets exports over the last decade, mostly due to demand in the UK and EU, and the potential for increased exports in the future.

Since 2012, U.S. wood pellet exports have increased from $258 million to $1.5 billion, which is an increase of 498%. According to USDA (2023), Louisiana, Georgia, North Carolina, Virginia, and Florida have been leading states. Figure 1 shows U.S. wood pellet exports (in million metric tons [MT]) from 2012-2022 by destination (UK, EU, and Rest of World). Note that the UK has accounted for the major share of the overall rise in exports since 2012, while the EU has accounted for the major share of growth in more recent years (2021 and 2022). Since 2012, U.S. wood pellets exports have increased from 1.9 million MT (35% shipped to the UK and 57% shipped to the EU) to nearly 9.0 million MT by 2022 (59% shipped to the UK and 31% shipped to the EU). During this period, the UK accounted for as much as 90% of total U.S. exports (see 2016). The demand for wood pellets in Europe has significantly outpaced domestic production over the past ten years. This has resulted in increased imports from mainly the U.S., Russia, Belarus, and Ukraine. With the Russian invasion of Ukraine, wood pellet imports from Russia, Belarus, and Ukraine have been significantly impacted (Flach and Bolla, 2022), which likely explains the recent increase in U.S. exports to the EU and the increase in export prices from an average of $124/MT (2012-2020) to well over $150/MT in 2021 and 2022 (USDA, 2023).

Figure 1. U.S. wood pellet exports by destination: 2012-2022

References

USDA (2023) Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

Flach, B., and S. Bolla (2022) EU Wood Pellet Annual. Report Number: E42022-0049. USDA, Foreign Agricultural Service.

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Muhammad, Andrew. “U.S. Wood Pellets Exports Continue to Reach Record Levels.” Southern Ag Today 3(10.4). March 9, 2023. Permalink

The 2022 data on U.S. agricultural exports are now available and it looks like another record year. U.S. agricultural exports were $196 billion in 2022, up $20 billion (up 11%) when compared to the previous year. Note that 2021 was also a record year for U.S. agricultural exports ($177 billion). It appears that record sales were more so due to higher commodity prices and global inflation than an increase in real export sales. That is, the U.S. did not necessarily sell more soybeans, grains, meats, or other products to the world, we simply sold the same or even lower volumes at higher prices.

Figure 1 shows both the agricultural export value ($ billion) and volume (million metric tons [MT]), as well as the average export price or unit value ($/MT) for the U.S. Given the broad range of exported products, a total volume measure is clearly a representative equivalent. However, as long as the U.S. Department of Agriculture is consistent every year with how volumes are measured, comparisons over time can reveal what is driving recent export growth. In 2021, U.S. agricultural exports increased from $150 to $177 billion, which was an 18% increase. However, the export volume during this period increased by only 2%: 226 million MT in 2020 to 230 million MT in 2021. Given the larger increase in value, clearly, the record in 2021 was more so due to prices. However, albeit relatively smaller, the volume did increase. In 2022, however, the volume of U.S. agricultural exports (216 million MT) was down by 6%, despite the value being up by 11% to a record level. Note that the average export price or per-unit export value in 2022 ($906/MT) was up 18% when compared to the previous year ($768/MT). Thus, the most recent record is all due to higher prices.

In closing, record export sales in the last two years being more inflationary than representative of real export growth is not necessarily a bad thing and is in fact, quite laudable. Most important, higher values do suggest higher revenues for U.S. producers regardless of the quantities being sold. When taking a longer view, there is another positive takeaway. Note that export volumes significantly decreased with rising prices in past years (e.g., 2010 – 2013), resulting in negligible increases in export values. Whereas in the last two years, export volumes have remained relatively stable despite significantly higher prices.

Figure 1. U.S. Agricultural Exports (Volume, Value, and Unit Value): 2010-2022

References

US. Department of Agriculture. 2023. Global Agricultural Trade System (GATS). Foreign Agricultural Service, Washington, DC.

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Muhammad, Andrew. “U.S. Agricultural Exports Set Another Record in 2022, but Higher Prices Appear to be the Cause.” Southern Ag Today 3(6.4). February 9, 2023. Permalink

In a previous article, I highlighted that China’s demand for beef is breaking records and imports have increased to unprecedented levels in recent years. Since 2010, Chinese beef imports increased from about $100 million to nearly $16.6 billion by 2022 (nearly a 16,000% increase), making China the world’s largest beef importing country (Trade Data Monitor®, 2023; UN Comtrade, 2022). In years past, beef was not a major protein source in China, but economic growth and exposure to western diets has increased beef awareness. Due to several factors (higher incomes, health awareness, protein shortages due to African swine fever), Chinese consumers have diversified their diets away from pork, the traditional animal protein. Beef demand is outstripping supply in China, resulting in rising imports. As mentioned in the previous article, U.S. beef exports to China have significantly increased as a result. But how does the U.S. compare to other beef exporting countries in the Chinese market?

Figure 1 shows the value (in billions) of China’s beef imports by major exporting source: Argentina, Australia, Brazil, New Zealand, Uruguay, United States, and Rest of World. Rest of World is an aggregation of all other countries. Note that Chinese imports of U.S. beef products in 2022 were $1.7 billion, making China a leading destination market for the U.S. From the Chinese perspective, however, this was about 10% of China’s total imports, making the U.S. China’s 4^th leading supplier ahead of Australia ($1.5 billion, 9%) and New Zealand ($1.4 billion, 8%). The figure shows that South American countries are more dominant in the Chinese market (Argentina – $2.5 billion, 15%; Uruguay – $1.8 billion, 11%). This is especially true for Brazil. In 2022, China imported nearly $7.0 billion of beef products from Brazil. No other country comes close (40% of China’s beef imports). What’s interesting is that both Brazilian and U.S. beef were banned in China due to animal disease issues (e.g., FMD, BSE). While the U.S. recovery since 2017 has been noteworthy, Brazil’s recovery since 2014 has been quite extraordinary.

Figure 1. Chinese beef and beef product imports by exporting source: 2010-2022

References

UN Comtrade (2022). UN Comtrade Database. https://comtrade.un.org/

Trade Data Monitor (2023). https://www.tradedatamonitor.com/

Muhammad, Andrew. China Emerges as a Leading Destination for U.S. Beef Exports. Southern Ag Today 2(49.4). December 1, 2022. https://southernagtoday.org/2022/12/china-emerges-as-a-leading-destination-for-u-s-beef-exports/

Author: Andrew Muhammad

Professor and Blasingame Chair of Excellence

The University of Tennessee

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Muhammad, Andrew. “China’s imports of U.S. beef continue to increase. But how does the U.S. compare to other competing countries?” Southern Ag Today 3(2.4). January 12, 2023. Permalink

China’s demand for beef is breaking records and imports have increased to unprecedented levels in recent years. Since 2010, Chinese beef imports (carcasses and muscle cuts) increased from less than $100 million to nearly $12.5 billion by 2021 (14,000% increase), making China the world’s largest beef importing country (UN Comtrade, 2022). In years past, beef was not a major protein source in China, but economic growth and exposer to western diets has increased beef awareness. Due to several factors (higher incomes, health awareness, protein shortages due to African swine fever), Chinese consumers have diversified their diets away from pork, the traditional animal protein (Muhammad et al. 2022). Beef demand is outstripping supply in China, resulting in rising imports. Consequently, U.S. beef exports to China have increased to record levels.

It was not that long ago that the Chinese government banned U.S. beef after the discovery of bovine spongiform encephalopathy (BSE) in 2003. Almost 14 years later (May 2017), the China government reopened its market to U.S. beef, but not without restrictions. In January 2020, however, the United States and China signed the Phase One Trade Agreement, where China expanded the scope of beef products imported, eliminated age restrictions on slaughtered cattle, and recognized the U.S. beef traceability system. As a result, U.S. beef exports to China significantly grew. Since 2017, U.S. beef exports to China grew from $31 million to $1.6 billion in 2021, an increase of 4,800% increase (Hanzel 2021; USDA, FAS 2022).

Figure 1 shows the volume in metric tons (MT) of U.S. beef and beef product exports to major destination markets: Japan, Mexico, South Korea, Hong Kong, Canada, Taiwan, and China. In 2017, when the Chinese market was reopened to U.S. beef, sales to China were less than 3,000 MT and a fraction of sales to other major markets. In 2021, however, China became the 4^th largest destination for U.S. beef and beef product exports (191 thousand MT), behind Japan (318 thousand MT), South Korea (277 thousand), and Mexico (201 thousand). Year-to-date exports in 2022 suggest that China will be the 3^rd leading destination, and possibly the 2^nd leading destination if this trend continues. Note that exports in 2022 to all major destinations except China have either decreased (Japan, Mexico, and Hong Kong) or remained relatively the same when compared to last year. Exports to China, however, increased to 192 thousand MT as of September 2022, a 39% increase when compared to the previous year. At this rate, U.S. beef exports to China will be on par with South Korea and Japan.

Figure 1. U.S. beef and beef product exports by major destination country: 2017-2022

References

Hanzel, M. (2021). Beef – New to China Market Product Report. 2021. Report Number: CH2021-0016. U.S. Department of Agriculture, Foreign Agricultural Service.

Muhammad, A., C. Valdes, K. DeLong, and C. Grebitus (2022) “The Rise of Beef Demand in China: How Competitive is U.S. Beef when compared to Brazil and Other Major Exporters?” Arizona Food Industry Journal, Dec. 2022 (forthcoming)

U.S. Department of Agriculture, Foreign Agricultural Service (2022). Global Agricultural Trade System (GATS). https://apps.fas.usda.gov/GATS/default.aspx

Author: Andrew Muhammad

Professor and Blasingame Chair of Excellence

amuhamm4@utk.edu

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Muhammad, Andrew . “China Emerges as a Leading Destination for U.S. Beef Exports.” Southern Ag Today 2(49.4). December 1, 2022. Permalink