Beef is the new gold, at least for the US red meat industry. And pork is not far behind as the solid silver. That sums up the performance of the industry in the first six months of 2018, a half in which beef profits for packers sprinted to new records in early June. Pork profits started the year strongly but then ran into headwinds in May and June.

Fueling both performances, but especially beef’s, was strong demand at home and outstanding demand abroad. The year began with forecasts that packer margins would not top their record performance in 2017. That’s because 2018 beef and pork production was expected to be each up at least 5 percent from last year. The feeling was that these increases would force wholesale prices lower and eat into packers’ profits.

This occurred to some extent for pork processors, but the opposite occurred for fed beef processors because domestic beef demand at both retail and foodservice was stronger than expected in the first half, fueled by a strong economy, declining unemployment and wage increases for most workers. Beef sold extremely well at retail even though average prices there were higher than last year. The fact that beef sold so well proved that demand was stronger than in the year-earlier period, analysts say.

Even stronger demand for US beef and pork internationally occurred in the first half. Beef exports the first four months of the year were up 10 percent in volume to 429,286 metric tons (mt) and export value was $2.59 billion, up 20 percent on last year’s record pace. Exports accounted for 13.4 percent of total beef production in the period. Pork exports for January through April were up 4 percent in volume to 866,346 mt, which was ahead of last year’s record pace. Export value increased 9 percent to $2.29 billion.

US beef continues to attract new customers around the world, says the US Meat Export Federation (USMEF). Japan and South Korea remain the top export markets for US beef and the enthusiasm for US beef in these markets may be at the highest level ever seen by USMEF’s President and CEO Dan Halstrom. In nearly every segment of the retail and restaurant sectors, US beef is attracting new customers with a wider range of cuts and menu items. But US beef’s popularity is also strengthening in other Asian markets and in the Western Hemisphere, he says.

Pork profits started strong at the beginning of 2018, but challenges kicked in during May and June

Pork power

Mexico was again the pacesetter for pork exports. Through the first four months, exports to Mexico were 7 percent above last year’s record volume at 282,675 mt, with value up 6 percent to $505.4 million. But maintaining this pace will be challenging, with Mexico announcing retaliatory tariffs on imports of most US pork products that took effect June 5, USMEF says.

The tariff on unprocessed US pork products, notably legs and shoulders, began at 10 percent and increased to 20 percent July 5. The tariff does not include pork variety meats but it will impact the export of US hams to Mexico. Hams represent 75 percent of all US pork exports to Mexico. Exports in 2017 totaled 40 million hams.

Red meat exports so far this year are well above US Dept. of Agriculture’s forecasts it made at the start of the year. But analysts and exporters see no reason why they should slow down in the second half. Andrew Gottschalk,, doubts they will. Just as wages are being boosted in the US, so too are wages abroad increasing and thus demand for protein, he says.

Fed beef processing margins began the year stronger than a year ago. The first quarter saw negative margins in February, but they still averaged $25 per head for the quarter, according to data. That went against $2.63 per head a year earlier. Margins improved dramatically in April and May due to strong beef demand, larger weekly slaughter levels and significant erosion in live cattle prices.

Margins set new records of nearly $292 per head the first two weeks of June. This far exceeded the previous record of $228 per head set the last week of June last year. Margins for the first 10 weeks of the second quarter averaged $153 per head, according to This likely guaranteed record earnings for any quarter for all fed beef processors.

Pork margins in the first half were unable to match their record performance in 2017. But they still averaged $20 per head in the first quarter and nearly $19 per head in the first 10 weeks of the second quarter. Margins though went into single digits the first week of June as wholesale pork prices fell to nearly 16 percent below the same week last year, while live hog prices were only 8 to 9 percent lower. This caused pork processors to reduce their slaughter levels from the record high levels seen early in the year (which reflected added processing capacity from the year).

The big corporate news in the first half was the $969 million acquisition of 51 percent of National Beef Packing by Marfrig Global Foods, Brazil’s second-largest beef company behind JBS SA. This made Marfrig the second-largest beef processor in the world in terms of production capacity. But it will be behind Tyson Foods Inc. and Cargill in terms of annual sales.

Tyson meanwhile continued to focus on protein and changing consumer preferences. It agreed to sell bakery businesses and acquired Tecumseh Poultry LLC, an organic chicken processor in Nebraska specializing in air-chilled poultry. The latter move makes Tyson one of the nation’s leading producers of organic branded chicken, the company says. Tyson earlier had agreed to acquire the poultry rendering and blending assets of American Proteins Inc. and Ampro Products Inc. for $850 million. Tyson’s innovation lab also launched a brand of protein crisps dubbed “Yappah!” and Tyson partnered with Flashfood Inc. for a three-month pilot in Detroit, to procure, package and sell edible food that grocers will not sell.

The first half of 2018 thus proved that growing demand everywhere for protein is reaping huge opportunities and rewards for the US red meat industry.