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Beef Exports – Demand surges, uncertainty and volatility

Beef exports started 2019 with a bang! International demand is hot with beef exports up 22% from last year in January and up 25% in February. Big drivers have been Japan and mainland China.
Larger volumes going to Japan in the first half of the year were expected as reduced tariffs came into effect through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Since December the Japanese beef tariff has dropped from 38.5% to 26.6% on both fresh and frozen beef. Countries, like Canada, that are a part of the CPTPP are now exempt from the 50% tariff on frozen beef when the safeguard levels are triggered.
In March pork prices in China surged as the market had worked through the initial glut of product following the announcement of African Swine Fever (ASF). January inventories show that China has reduced their hog numbers by one million head. Smaller Chinese pork production throughout the rest of 2019 is expected to support global protein prices. However, large uncertainty on the supply impact will contribute to volatile protein prices both abroad and in Canada – as demand for pork and substitutes is determined.

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