By Richard Smith
DTN Japan Correspondent
TOKYO (DTN) -- Japan's imports of U.S. pork exports were higher than last year in the January-May time frame, but U.S. exporters face stiffer competition from their EU competitors just when volume shortage due to porcine epidemic diarrhea has brought on higher U.S. prices.
In addition, the fall of the yen has reduced Japan's purchasing power.
Japan Ministry of Finance January-May 2014 figures provided by MEF economist Erin Borror show Japan's U.S. pork purchases went up 4% year-on-year to 185,388 metric tons (includes processed product).
PED has also hit Japan and the resulting pork shortage has created a need for more imports. Global Trade Atlas data that Borror provided shows Japan's total pork import market grew 9% year-on-year in January-May. With a 43% share, the U.S. remained the highest supplier.
U.S. hog and pork prices reached a peak during the first week of April. Prices are now running higher and for the pork cutout, back to the peak value seen in early April (above $1.30 per pound). Cash hog prices for the third week of June were $1.18 per pound, up 16% from last year, and reached $1.25 June 27, nearing the peak of $1.28 seen during the first week of April, Borror said.
Japan's domestic hog prices have also surged. "In May prices averaged $2.74 per pound, up 17% from last year, partly due to PEDv-related supply concerns," Borror said, quoting Japan Agriculture Livestock and Industry Corporation figures.
Meanwhile, Japan's total January-May imports from the EU surged 18.5% to 119,860 metric tons as Russia, the EU's largest pork export market, banned EU pork in February because of African swine fever. EU pork exporters reacted by shipping higher volumes to Asia to offset the loss of the Russian market, Borror said.
"This has meant stiffer competition for U.S. pork, at a time when we have relatively higher prices," she said.
Japan Meat Traders Association executive director Tatsuo Iwama said it would be difficult to forsee what influence PED will have on the trade. "I think it is difficult to forsee how things will go for U.S. pork exports to Japan," Iwama said.
Massillon, Ohio-based Sugardale international business director Avy Konor said his company's export volumes to Japan haven't gone down, although he described the trade as being "kind of flat." PED is mainly affecting prices because of the hog shortage, with a double effect brought on by the lower yen, Konor said.
At 102 yen, the U.S. dollar has strengthened 16% to the yen compared to one year ago, when it traded only at 88 yen.
Konor said there has been some sacrificing of profit margins on both Sugardale's and their Japanese customers' sides. "They're losing money, and we have reduced our prices," he said.
Conversely, Pascoag, R.I.-based charcuterie company Daniele, Inc. raised its prices three times in the past six months and will implement another hike shortly. "Still, we have not been able to recoup the increases in raw commodity costs," said salesman Davide Dukcevich.
Daniele also has to endure pork shortages from its suppliers. When asked how the company's Japanese customers have been reacting to the situation, Dukcevich said, "It's a difficult situation."
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