This document summarizes the global pork trade outlook for 2019, with a focus on key markets and issues. Global pork trade is expected to set new records this year, though the degree to which the U.S. benefits depends on tariffs. China, Europe, Mexico, and Japan are highlighted as four key areas due to African swine fever, Brexit, U.S. tariffs on Mexico, and continued growth in Japan-U.S. trade respectively. Strong global demand remains but will be impacted by these issues and economic conditions.

1. Pork Trade Update
Erin Borror
Economist, USMEF
Minnesota Pork Congress
February 5, 2019

2. Pork trade in the year of the pig
• Global pork trade will set new records this year
• The degree to which the U.S. benefits will depend largely on tariffs
Four key areas:
• China – ASF & tariffs
• Europe – ASF & Brexit
• Mexico –tariffs
• Japan – Japan-U.S. urgency
• Strong demand remains in the rest of world,
But will be impacted by above & economy

3. A 10% drop in China’s production
means 4% decrease globally…
0
20,000
40,000
60,000
80,000
100,000
120,000
Thousandmetrictons
Global Pork Production Others
Japan
Mexico
Korea, South
Philippines
Canada
Vietnam
Russia
Brazil
United States
European Union
China
Source: USDA/FAS fall 2018 & USMEF estimates

4. U.S. to continue to lead production
growth for top exporters
Source: USDA/FAS fall 2018
0
5,000
10,000
15,000
20,000
25,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Thousandmt
Pork Production for Top Exporters
European Union
United States
Brazil
Canada
Mexico
Chile

5. In a scenario where China’s production drops by 10%,
exports to China could increase by 1.5 million mt
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 2019f
Pork/pvm Exports to China/HK
Chile
Brazil
U.S.
Canada
EU28

6. Driving global pork trade to a record 9-10
million mt
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 2019f
Metrictons
Global Pork & Variety Meat Exports, annual
China
Mexico
Chile
Brazil
Canada
U.S.
EU28
Source: GTA and USMEF estimates
2019 is assuming a
10% drop in China’s
production; would
be similar to the shift
in 2016 trade
+17%
+18%

7. China already the largest importer of pork
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Metrictons
Pork & variety meat imports from all suppliers
2013 2017 2018e

8. Pork exports mostly flat outside China…
As growth across most markets has offset the loss of
Russia & Ukraine buying
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2013 2014 2015 2016 2017 2018e 2019f
Metrictons
Pork & Variety Meats to Rest of World ex China/HK
Mexico
Chile
Brazil
Canada
U.S.
EU28

9. Drives a 10%-15% increase in total U.S.
exports vs. 5% baseline forecast
• The increase to China is 1.5 million mt, of which 900k mt can come from
the EU
• Drives EU exports to 4.45 million mt, +27%
• Canada’s growth could be constrained
• And the hedge against EU ASF …
favors U.S. growth
• Latin America
• Korea, Japan
• Southeast Asia
• U.S. 2019 export potential scenario… 2.75 million mt, +15%
*does not include HS 0504 variety meats
>>Retaliatory tariffs continue to
limit U.S. export opportunities
in China and Mexico
>>The “hole” in China’s
supplies might not materialize
until later in 2019, with a more
significant import surge in 2020

10. Slide with ChartAs of December, hog prices reflected abundant supplies
… and retaliatory tariffs
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Japan Korea Taiwan Vietnam China Mexico Chile EU Brazil U.S. Canada
U.S.$/lb.
Estimated Carcass Prices
Dec 5yr avg Dec-17 Dec-18

11. Slide with ChartU.S. futures now waiting for something
more tangible? China March 1 Deal?

12. Slide with ChartMany variables impacting U.S. hog prices
Crisis = opportunity?

13. Slide with ChartChina’s situation

14. Transportation of pork in China~ Boyar estimates
Yunnan
1100
Sichuan
-1150
Chongqing
-870
Guizhou
-190
Guangxi
140
Guangdong
-4480
Fujian
-630
Jiangxi
590
Zhejiang
-2070
Jiangsu
-1730Anhui
400
Liaoning
760
Hebei
930
Shandong
1360
Henan
2410
Hubei
1120
Hunan
1200
Beijing -580
Tianjin -390
Heilongjiang
580
Jilin
660
Inner Mongolia
60
Shanxi
-60
Shaanxi
40
Ningxia
-10
Gansu
-70
Qinghai
-30
Tibet
-30
Sinkiang
170
Import ＞100
In Balance: --100~100
Export: 100~490
Export: 500~990
Export: ＞ 1000
Unit: 1,000 MT
Hainan
-90
In 2017, there were 16
provinces transported
pork out of the province,
a total of 11.53 million
MT.
There were 15 provinces
transported pork into the
province, a total of 13.54
million.

15. Slide with ChartTransportation restrictions =
wide spread in hog prices
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
Ntl Avg Liaoning Henan Sichuan Guangdong Zhejiang
U.S.$/poundlive
China’s Hog Prices in January 2019
5-Jan 12-Jan 19-Jan 26-Jan
+3% yoy
-32% yoy
-72% yoy

16. Slide with ChartChina’s hog prices low going
into Chinese New Year

17. Slide with ChartRecord chicken prices as pork substitute
-
10
20
30
40
50
60
70
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e
Kgpercapita
China’s per capita consumption
Pork Poultry Beef

18. Slide with Chart

19. ASF in Eastern Europe
EU ASF-infected countries=
• 4.4 million mt pork
• 50 mil head slaughter
• 19% of EU 2017 production
• Poland, Hungary & Belgium
are/were major pork exporters
• Most major importers have
not recognized regionalization
for ASF and impose country-
wide import bans after
findings

20. ASF active
in January
• Domestic pigs:
Romania 22 plus a
couple cases in
Ukraine & Poland
• Wild boars: Poland
223, Hungary 95,
Latvia 70, Belgium
67, Lithuania 67,
Romania 44,
Estonia 24
Poland
Ukraine
RomaniaHungary
Belgium
Latvia
Lithuania

21. Europe’s cases mostly in wild boar; Romania
most active in domestic, backyard & large farms
1,163
109 105 51 10
170
2,438
41
1,443
161 138
685
0
500
1,000
1,500
2,000
2,500
3,000
Romania Poland Ukraine Lithuania Belgium Hungary Latvia
cases
Cases of ASF in European Countries in 2018
Domestic Wild boar
Jan: 22 domestic;
44 wild boar
Jan: 1 domestic;
223 wild boar
Jan: 67 wild Jan: 95 wild Jan: 70 wildJan: 67 wildJan: 2
domestic

22. Europe’s big exporters
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Germany Spain Denmark Netherlands Poland France UK Ireland Hungary Others
Metrictons
EU pork & variety meat exports to third countries
2013 2014 2015 2016 2017 2018e

23. Europe’s big exporters mostly producing
more pork, except Germany
0
1,000
2,000
3,000
4,000
5,000
6,000
Germany Spain Denmark Netherlands Poland France UK Ireland Hungary Others
Thousmetrictons
EU pork production by top exporters
2013 2014 2015 2016 2017 2018e

24. EU exports continued to grow, without
access to Russia and despite ASF
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
2013 2014 2015 2016 2017 2018e
Metrictons
EU pork & pork variety meat exports to top markets
Others
Russia
Taiwan
Australia
United States
Hong Kong
Korea, South
ASEAN
Japan
China
Source: GTA and USMEF estimates

25. Especially to Asia…they remain key supplier to
China and China is by far their biggest market
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
China Japan ASEAN Korea,
South
Hong Kong United
States
Australia Taiwan Russia Others
Metrictons
EU pork & pork variety meat exports to top markets
2013 2014 2015 2016 2017 2018e
Source: GTA and USMEF estimates

26. EU pig prices remain low…waiting for the
China buying
• With sharp increase in pork
production (Jan-Oct 2018 +2.7%)
• Sluggish intra-EU demand and
relatively steady exports
Risks for their production:
• ASF, high feed prices, low hog prices
• 2019F is for steady production

27. A bit of a rebound in EU piglet prices
US$48/head

28. Brexit and increasing odds for crashing out could
have a big impact on over 1 million tons of pork trade
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
UK pork imports UK pork exports
Metrictons
UK Pork Trade
2016 2017 2018e
Net UK imports from EU member
states of about $2 billion
$2.5 billion
$610 million

29. Canada’s exports slow to China & U.S. but growth
to Japan, Mexico, elsewhere in Asia
-11%
-11%
+7%
+23%
-1% +31% +20%
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
China, Hong
Kong
United States Japan Mexico Taiwan S. Korea Philippines Others
MetricTons
Canada’s pork & variety meat exports
2013 2014 2015 2016 2017 2018e
Source: GTA
2018: 1.15 MMT, -2.5%
China/HK accounted for 24% of Canada export volume, down from 29% in 2016

30. U.S. pork and variety meat exports managed
to set new records in 2018
$0
$1
$2
$3
$4
$5
$6
$7
$8
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
BillionUSD
MetricTons
MT USD
Source: USDA/FAS & USMEF; fall 2018 forecasts
Pork exports
accounted for 22.7%
of production and
26.1% when adding
variety meats as
compared to 22.1%
and 26.5% last year.
Jan – Sep export value
per head averaged
$52.46/head, down
$0.32/head or -1%

31. Top 2018 U.S. Export Growth Markets…
the silver lining
0
10,000
20,000
30,000
40,000
50,000
60,000
Korea S.
America
ASEAN C.
America
Caribb. Aus/NZ Japan Taiwan Mexico TOTAL
MetricTons
Year-over-Year U.S. Pork Export Growth
Jan - September
Source: USDA/FAS & USMEF

32. Mostly continued growth from 2017, but note
the dramatic slowdown to Mexico & China
-100,000
-50,000
0
50,000
100,000
150,000
Korea S.
America
ASEAN C.
America
Caribb. Aus/NZ Japan Taiwan Mexico TOTAL China/HK Canada
MetricTons
Year-over-Year U.S. Pork Export Growth
Jan – September 2017 and 2018
Jan-Sept '17 Jan-Sept '18
Source: USDA/FAS & USMEF

33. Loss summary: impact of retaliatory duties following
U.S. Section 232 (China & Mexico) & 301 tariffs (China)
• U.S. ham primal -19% or -$6.63 per head
• U.S. picnic primal -22% or -$3.32 per head
• Loss in ham + picnic value = -$9.95 per head
• Front & hind feet & picnic hocks = -$1.80 per head
• Hams + picnics + feet lost value = -$11.75 per head
• $860 million when spread across June-Dec harvest
• Lost market share & customer efforts to diversify
• U.S. as a reliable supplier????

34. Mexico’s pork imports record-large again
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
2013 2014 2015 2016 2017 2018e
Metrictons
Exports of pork/pvm to Mexico
EU28
Chile
Canada
U.S.
U.S. includes HS 0504 variety meats
U.S. market share dropped
from 87% to 85%

35. Mexico’s hog prices have remained strong
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
Sep-15
Jan-16
May-16
Sep-16
Jan-17
May-17
Sep-17
Jan-18
May-18
Sep-18
U.S.$/lb
Live Hog Prices in Mexico & U.S.
Through Dec 2018
Mexico U.S.

36. With a strong finish to 2018 as tariffs
remained on U.S. pork

37. Mexico’s efforts to diversify suppliers
0
2,000
4,000
6,000
8,000
10,000
12,000
Metrictons
Pork exports to Mexico, excluding variety meats
Canada EU
TRQ use: 6,430 mt/
350,000 mt
Canada
EU

38. Growth in Mexico’s pork exports…CPTPP
Source: Global Trade Atlas
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2013 2014 2015 2016 2017 2018e
Metrictons
Mexico’s Annual Exports, including variety meats
Others
Canada
China
S. Korea
U.S.
Japan

39. U.S. - Japan trade agreement
• Urgency: all is not yet lost, but we are now way behind
• Japanese market booming / in transition
• Companies looking to invest for future – noting decrease in
Japanese production expected, high labor costs, etc.
• Expect continued growth in Japanese red meat consumption and
imports accounting for a larger share of the market
• Need assurance that U.S. will be FTA/TAG partner soon
• What is the reality for rapid progress / agreement scope?
• Exporter priorities conveyed to USTR= level playing field ASAP
• Near-term loss estimates: $600 million pork and $550 million beef
… lost opportunities exceed $1 billion each in 10 years
• http://www.usmef.org/usmef-assesses-potential-pork-and-beef-
industry-losses-due-to-japans-preferential-trade-agreements/

40. “Niku Boom” Japan imports record volumes of
pork (>$5 billion)
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2013 2014 2015 2016 2017 2018
Metrictons
Japan’s Pork & Variety Meat Imports
Others
Chile
Mexico
Canada
EU-28
United States
Total imports: 1.16 mil mt, +0.5%;
U.S.: 407,000 mt, steady
U.S. market share held at 35%

41. Japan’s imports of U.S. pork
-
50,000
100,000
150,000
200,000
250,000
chilled frozen gsp other processed
Metrictons
Japan’s U.S. pork imports by category
2010 2011 2012 2013 2014 2015 2016 2017 2018
Tariffs on
competitor’s
processed pork
phasing to zero

42. Canadian pork gaining chilled market share
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
20%
30%
40%
50%
60%
70%
80%
2011 2012 2013 2014 2015 2016 2017 2018f
MetricTons
MarketShare
Japan’s Chilled Pork Imports
TTL Imports Canada U.S.
Source: MAFF

43. Initial tariff reductions on implementation (Dec 30 for CPTPP
and Feb 1 for EU) and again at start of JFY, April 1, 2019
4.30%
20.00%
10.00%
9%
2.20%
16.60%
8.30%
4.30%
1.96%
13.30%
6.60%
4.30%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Chilled/frozen pork Prepared pork Sausages Ham & Bacon
Advaloremduty
Japan’s Tariffs on Pork Imports
U.S. CPTPP & EU Implementation CPTPP & EU April 1, 2019
Zero by
2023
Zero by
2028
Source: USMEF and agreement text
Tariffs are eliminated by
2023 for prepared pork
& sausages; and by
2027-2028 for
chilled/frozen pork and
ham & bacon
Zero by
2027
Zero by
2023

44. 0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Metrictons
Others
Chile
Mexico
Canada
EU-28
United
States
EU market
share has
increased
to 18%
Record-large GSP imports, driven by EU, Mexico, Chile,
Canada …FTA partners
Source: MAFF

45. Korea also importing record volumes of
pork; largest growth market for U.S.
0
100,000
200,000
300,000
400,000
500,000
600,000
2013 2014 2015 2016 2017 2018
Metrictons
Korea’s Pork & Variety Meat Imports
Mexico
Chile
Canada
United States
EU-28
Total imports: 600,000 mt, +17%;
U.S.: 212,000 mt, +30%
U.S. market share increased from
31.6% to 35%

46. Korea producing & importing more pork
most imports duty-free
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
100
200
300
400
500
600
700
800
900
1000
Thousmetrictons
Korea’s Pork Situation
Dom production Imports U.S. SS rate

47. Slide with ChartMeat – centric Home Meal Replacement

48. Summary
• It will be another wild year, with trade driven by forces out of our
control: disease and tariffs
• But U.S. exports will be record-large, barring our own crisis
• Degree to which U.S. is able to supply the world depends on U.S.
trade policy
• All pork producers globally are looking to sell more to China
• China’s supply “hole” will be partly offset by reduced
consumption and larger imports of pork, poultry, beef, sheep- the
big import surge might not happen until late 2019-2020
• Mexico’s domestic pork industry is growing – permanent damage
• Japan’s pork imports will continue to set new records, with growth
going to our competitors until we get a trade agreement

50. Thank You…and Happy Year of the Pig!
Erin Borror
eborror@usmef.org
303-623-6328
www.usmef.org

51. “Niku Boom” Japan’s meat & poultry
imports reach a record 3 million mt
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2013 2014 2015 2016 2017 2018e
Metrictons
Japan’s meat & poultry imports
sheep meat
sausages
pork fat
offal
prepared pork
chilled beef
frozen beef
chilled pork
prepared poultry
frozen pork
chilled/frozen poultry
Source: GTA and USMEF estimates

52. Slide with ChartIts all about Korean consumption growth
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019f
Korean per capita pork “consumption”
domestic per capita imported per capita U.S. per capita

53. Chilled pork…and GSP driving the growth in
Japan’s imports
-
100,000
200,000
300,000
400,000
500,000
600,000
chilled frozen gsp other processed
Japan’s pork imports by category
2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019f

54. Mexico buying more from Canada and EU; less from
U.S., at lower prices
• Based on reported exports to Mexico, U.S. market share fell
from 87% to 81% in June-Oct (2017 vs. 2018)
• U.S. pork exports to Mexico decreased by $111 million in Jun-
Oct; although volume fell 4%, value decreased by 21%
• Canada’s pork/pvm exports to Mexico: July (12,200 mt, +24%),
Aug (11,685 mt, +26%), Sept (12,500 mt, +42%), Oct (12,157 mt,
+48%), Nov (12,456 mt, +30%)
• EU pork exports to Mexico surged in July (1,809 mt, +747%),
August (2,343 mt, +733%), Sept (1,634 mt, +323%), Oct (1,191
mt, +300%)
• U.S. ham primal -19%
• U.S. picnic primal -22% (June-Dec 2018 vs. year earlier)
• On a per head basis, hams = loss of $6.63 and for picnics a loss
of $3.32 for a combined decrease in per-head values of $9.95.

55. EU Outlook

57. Outside China, biggest growth markets have
been: Mexico, Korea, Japan, Philippines
-800000
-600000
-400000
-200000
0
200000
400000
600000
800000
2018-2013
2018-2013

58. 4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
Metrictons
$/lb.
U.S. frozen pork feet exports to China/HK U.S. average FOB plant front feet price
U.S. average FOB plant hind feet price
U.S. front feet prices averaged up
26% in 2017~ and down 21% in 2018
Hind feed averaged up 32% in 2017
and down 25% in 2018
Prices for feet dropped from record
levels in early 2018
Source: USDA/AMS, Global Trade Atlas

59. Slide with ChartWe have been at a “strong dollar”
disadvantage

60. Record Large Global Pork Production
0
20,000
40,000
60,000
80,000
100,000
120,000
Thousandmetrictons
Global Pork Production Others
Japan
Mexico
Korea, South
Philippines
Canada
Vietnam
Russia
Brazil
United States
European Union
China
Source: USDA/FAS fall 2018 & USMEF estimates

61. “Synchronized Global Growth”
0
1
2
3
4
5
6
7
8
Percentchangeyoy GDP Growth Expectations
2017e 2018f
Source: Economist, Jan 2018
World Bank: global growth to slow from 3% to 2.9% in 2019
with downside risk

63. Russia’s imports plummet
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2013 2014 2015 2016 2017 2018e
Metrictons
Russia’s imports of pork & pork variety meats
EU-28 Brazil Chile United States Others
Source: GTA and USMEF estimates

64. Partly due to domestic policies and closure to most imports,
Russia’s pork production has grown despite ASF
• Russia’s exports are mainly variety meats to Hong Kong and
Vietnam; cuts to Ukraine and Belarus
Russia pork Production Imports Exports Per Cap Cons.
2007 1,640,000 900,000 1,000 17.9 kg
2018 3,235,000 58,000 85,000 22.5 kg
Percent change
+97% -94% +26%
Source: USDA/FAS, GTA and USMEF estimates

65. Brazil’s pork exports shift to China
121829 111256 128472
250908
203975
317556
134891 186157
239860
242040
257460 6660
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2013 2014 2015 2016 2017 2018
Metrictons
Brazil’s Pork & Variety Meat Exports
Others
Chile
Uruguay
Argentina
Angola
Singapore
Russia
China/HK

66. Brazil’s pork exports shift to China
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
China/HK Russia Singapore Angola Argentina Uruguay Chile Others
Metrictons
Brazil’s Pork & Variety Meat Exports
2013 2014 2015 2016 2017 2018

67. Canada exports less to U.S….