Report Highlights:

In 2013, Japanese imports of U.S. beef displaced a significant volume of Australian beef as the U.S. share of total beef imports climbed six percentage points to 35 percent. However, continuing supply constraints in the United States, relatively large Japanese reserve stocks, and fierce competition between beef, pork, and chicken in the retail and food service sectors point to a more modest increase in imports of U.S. beef in 2014. In 2013, a moderate increase in Japanese imports of U.S. chilled pork was outstripped by large decrease in imports of frozen pork, as Japanese importers sought lower prices and more diverse supply channels. Porcine diseases in North America and Europe will have a significant role on prices and trade flows in 2014. While consumer and industry responses to the April 1, 2014 Japanese consumption tax hike remain unknown, Japan will continue to be among the biggest importers of U.S. pork and beef in 2014.

Quantities listed in the text are made on the basis of Carcass Weight Equivalent (CWE) unless specified otherwise. Rates of conversion from product weight to CWE are:

Beef Cuts (Boneless) – 1.40

Pork Cuts (Boneless) – 1.30

Processed/Prepared Beef Products – 1.79

Processed/Prepared Pork Products – 1.30


2013 Market Situation Summary

Total Supply:

In 2013, Japan’s total beef imports grew moderately, up three percentage points from the previous year to 759,640 MT [Beef Cuts: up four percentage points at 748,000 MT, Prepared Products: down 32 percentage points at 11,640 MT]. The February 2013 implementation of the Less than 30 month Quality Systems Assessment (LT30 QSA) program, which greatly expanded market access for U.S. beef exports to Japan, resulted in stronger than previously forecasted substitution of U.S. beef for Australian beef in 2013. The U.S. share of total imports of beef cuts rose six percentage points from 2012 to 35 percent, with volume up 41 percent at 260,478 MT, while the Australian share of the beef cuts market fell six percentage points to 54 percent, with volume down 10 percent at 400,292 MT. Market share of total beef cuts from New Zealand, Mexico and Canada did not change in 2013. Under the LT30 QSA Program, Japan’s imports of U.S. edible beef offal (tongue, hanging tender, and intestines) nearly doubled to 30,784 MT (Product Weight), up 84 percent from 2012. The United States captured 52 percent of the edible offal market, up 14 percentage points from 2012, followed by Australia with 33 percent.

Compared to recent years, the yen remained relatively weak against the U.S. dollar in 2013. In U.S. dollar terms, average import prices of beef cuts/edible beef offal declined, but in yen terms, actual import prices of beef from U.S. and Australia were up, which was one of the factors discouraging imports of relatively expensive cuts that could have potentially seen greater demand.

Largely due to strong U.S. beef imports, quarterly frozen beef imports in Japanese Fiscal Year 2013 (JFY 2013: April 1, 2013 – March 31, 2014) came close to the trigger level for the special safeguard (SSG) mechanism in the first three quarters of JFY 2013. While frozen beef import volumes were regularly just below the trigger levels, chilled beef import levels continued to remain well below the trigger levels through the first three quarters of JFY 2013.

Japan’s 2013 total domestic beef output shrank two percent to 507,000 MT (total slaughter of 1.185 million head), down slightly from the previous year due to reduced slaughter of Wagyu steer, which more than offset increased slaughter of dairy and F1 cross breeds.

Total Distribution:

In 2013, growth in beef cut imports partially offset the decline in Japanese domestic beef output. The LT30 QSA program greatly enhanced U.S. beef’s position in the Japanese market in 2013, as a large number of Japanese clients reported switching from Australian to U.S. beef. Supporting this trend, the U.S. Meat Export Federation (USMEF) conducted highly visible promotion campaigns in 2013 following the expansion of access under the LT30 QSA. According to one market source, Japanese purchases of U.S. beef cuts in 2013 were highly concentrated on short plate, which is relatively low-priced compared with other cuts and used extensively for barbecue, beef bowl, and convenience store lunch boxes.

Despite Japanese import growth, there was a modest decline in total beef consumption, estimated at 1.232 million MT in 2013. Increased imports were largely diverted to ending stocks, which were up 26 percent from 2012 levels. According to a trade source, frozen beef imports outpaced prevailing market demand by a fair margin. Overall food service demand for imported beef slowed considerably in response to higher prices towards the end of 2013, more than offsetting relatively solid retail sector demand.

2014 Market Outlook

Total Supply:

Post revised its previous annual growth projection for Japan’s total beef imports downward to 756,000 MT in 2014 [Beef Cuts: up slightly to 748,000 MT, Prepared Products: unchanged at 13,000 MT from the previous year]. While still higher than 2013 levels, relatively large carryover stocks and persistent price pressures are expected to temper Japan’s total import demand for beef in 2014. In line with the continuing downward trend in beef production in Japan, and based on the number of calves expected to reach slaughter weight in 2014, Japanese total domestic beef output is projected to decline moderately in 2014, down by two percent to 500,000 MT (or 1.167 million head of slaughter). 

Post expects Japanese importers will continue to substitute U.S. beef for Australian product, resulting in the U.S. share of the total beef cuts import market climbing two percentage points to 37 percent at 280,000 MT, while Australian market share is forecast to fall three percentage points to 51 percent at 385,000 MT. Meat and Livestock Australia (MLA) is forecasting 2014 Australian beef exports to be below 2013 levels, due to tighter Australian beef supplies as a result of reduced annual slaughter. By destination, MLA projects Australia’s 2014 exports to be up for the EU and South East Asia, flat for China, and down significantly for Japan and Korea (2013 exports to China were up 371 percent from 2012 at 217,000 MT). 

At the projected level of growth, frozen beef imports are unlikely to trigger the special safeguard (SSG) mechanism in JFY 2014, since the quarterly trigger levels are higher in JFY 2014 as a result of higher import levels in JFY 2013. While seasonal demand is typically strong in April and May, it is difficult to predict how average Japanese consumers and Japanese retail and food service industries will respond to the consumption tax hike (from the present 5 percent to 8 percent) that will take effect on April 1, 2014. With such uncertainty on the horizon, Post will continue to monitor frozen beef import levels against the SSG level for the first quarter of JFY 2014.

Total Distribution:

As Japanese consumers continue to demonstrate a willingness to substitute between chicken, pork, and beef, Post expects that relatively high-priced domestic beef and some high-value imported cuts will be at a competitive disadvantage to less expensive pork and chicken in 2014. As total Japanese beef consumption declined modestly in 2013, Post moderated its previous annual growth projection for 2014. Total beef consumption is estimated up three percent to 1.268 million MT, with year-ending stocks unchanged from the 2013 level. However, if world beef supplies remain tight and U.S. prices high, Japanese retail and food service clients could shy away from beef, reducing total imports as well as total consumption in 2014.


2013 Market Situation Summary

Total Supply:

Japan’s 2013 total domestic pork output was slightly up from 2012 to 1.309 million MT (or 16.936 million head of slaughter), which partially offset a moderate decline in total pork imports that fell three percent to 1.223 million MT [Pork Cuts: down five percent at 960,000 MT (including a few thousand MT of carcass imports), Prepared Products: up six percent at 263,000 MT]. Market demand for imported chilled cuts remained strong at 382,200 MT, up 13 percent over 2012, with the United States and Canada claiming 68 and 30 percent, respectively, of total imported chilled cuts. Imports of U.S. seasoned ground pork rose 11 percent from 2012 to 168,100 MT.

However, the increases in chilled cuts and ground seasoned pork were more than offset by a sharp decline in imported frozen cuts, down 14 percent to 557,700 MT in 2013. Strong reductions of frozen cut imports from the United States (down 37 percent to 107,400 MT) and Canada (down 47 percent to 71,800 MT) were partially mitigated by increased imports from other suppliers, including Mexico, Spain, and Poland. At 533,600 MT, total imports of U.S. pork (chilled and frozen pork cuts as well as seasoned ground pork) were down five percent from 2012.

According to several trade sources, high prices and demand for greater supplier diversity drove Japanese market trends in 2013. As North American pork prices (particularly pork belly and picnic prices) remained high throughout 2013, many Japanese importers moved to diversify their supply base, increasing imports from lower-priced suppliers. Japan’s major convenience chains’ and quick-serve restaurants’ growing appetite for pork belly products requiring higher levels of manual labor also affected market dynamics, as this trend appeared to accelerate in 2013. In recent years, Mexican and Polish packers have been capitalizing on lower labor costs (relative to the United States and Canada) to provide these pork belly products in various specifications and forms tailored to Japanese market demands. While these conditions can partially explain Japan’s substantial reduction of frozen pork cut imports from the United States and Canada in 2013, the increase in chilled cut imports was largely due to solid retail and food service demand. Retail consumers have shown more interest in affordably priced U.S. and Canadian chilled pork cuts (often sold in larger volume ‘value packages’) over domestic Japanese chilled pork. The food service sector also increased utilization of imported chilled pork cuts as price competition between pork, beef, and chicken continued to drive menu offerings. 

Total Distribution:

In 2013, Japan’s total pork consumption was estimated marginally lower than 2012 at 2.55 million MT. Relatively solid retail demand in 2013 was somewhat tempered by intense competition with other proteins in the food service and ready-to-eat market segments, including a strong substitution effect for imported prepared broiler products and a large influx of imported frozen beef. Processing demand for pork was stable in 2013.

According to the Japan Ham and Sausage Processors Cooperative Association, Japan’s 2013 demand for frozen pork for processing was almost unchanged from 2012 at 377,394 MT (net product weight basis), with increased levels of domestic pork replacing imported pork [Domestic Pork: up eight percentage points to 83,296 MT; Imported Pork: down four percentage points to 294,098 MT]. In 2013, Japan’s total processed meat production for all types of ham, sausage, and bacon was up only slightly over 2012 at 539,722 MT (net product weight basis). Increased utilization of frozen carryover stocks also contributed to Japan’s reduction of frozen cut imports in 2013; year-ending stocks declined nine percent to 195,000 MT. 

Utilization of imported seasoned ground pork (mostly from the United States) was up 19 percent to 105,194 MT in 2013. While typically used for sausage manufacturing, Japan is increasing using seasoned ground pork for Chinese dumplings, steamed meat buns, and some meat bowl and patty dishes served in the food service and ready-to-eat sectors. This pattern is in line with the highly competitive and widespread Japanese ready-to-eat foods market trend towards lower cost and ready-to-use products.

2014 Market Outlook

Total Supply:

Post lowered its 2014 forecast for total imported pork cuts (frozen and chilled combined) to adjust for the decline in 2013 pork consumption, which was greater than what was projected in the last annual report. The remainder of the 2014 annual pork market outlook remains unchanged. 2014 total pork imports are projected unchanged from the previous year to 1.228 million MT [Pork Cuts: unchanged at 961,000 MT (including about 2,000 MT of hog carcass), Prepared Products: up slightly to 267,000 MT]. Recent occurrences of porcine epidemic diarrhea virus (PEDv) will have a limited impact on Japan’s 2014 domestic pork production situation with the annual total output projected only marginally lower from 2013 at around 1.305 million MT (or 16.85 million head of slaughters) assuming early containment of the disease (see Note 1).

Note 1: 2013 occurrences of PEDv in Japan have so far only affected the movement of animals in and from Kagoshima and Miyazaki, two major hog producing prefectures. As of March 4, 2014, the total count of infected animals was about 127,500 head (approximately 26,000 died, mostly baby pigs and piglets) at 175 farms in ten prefectures. Reports indicate the spread of PEDv is being effectively contained within Kagoshima and Miyazaki, though sporadic occurrences are continuing in several other prefectures.

The United States and Canada will continue to be the two major suppliers of chilled pork to Japan. However, Japan’s imports of frozen cuts from the United States and Canada may not easily recover from the substantial declines in 2013. The 2014 frozen cuts import picture will be influenced greatly by the impact of animal diseases on major supplying regions: PEDv in North America and African swine fever (ASF) in Lithuania and Poland (reported in February 2014).

Russia’s recent import ban on EU-origin pork in response to the detection of ASF in Lithuania is reportedly weakening pork prices in major EU pork exporting countries, including Denmark, Germany and Spain. Without pork from the EU, Russia may resume imports of U.S. pork in 2014 after effectively banning U.S. products since 2012. Combined with the persistence of PEDv in the United States, the outlook for 2014 is pointing towards tight supplies and high prices for U.S. pork.

Some trade sources believe that if Russia replaces imports of EU pork with U.S. product, then 2014 market dynamics could accelerate Japan’s shift towards alternate frozen cut suppliers, including the EU (other than Poland and Lithuania), Mexico and Chile. Regardless of Russian import policies, the trend towards increased Japanese imports of frozen cuts with greater levels of manual labor inputs looks set to continue in 2014, though the Japanese ban on Polish imports as a result of ASF will remain in place for some time. Japan’s 2014 demand for seasoned ground pork from the United States is projected to be roughly equal to 2013 at 169,000 MT, with potential growth curtailed by likely increased prices for raw material cuts in the United States. 

Total Distribution:

Though still within reach of record highs, Japan’s 2014 total pork consumption is projected slightly lower from 2013 at 2.527 million MT. However, similar to beef, it is difficult to predict how average Japanese consumers and Japanese retail, food service and meat processing industries will respond to the consumption tax hike (from the present 5 percent to 8 percent) that will take effect on April 1, 2014. Combined with prevailing high prices for Japanese domestic fresh and chilled- pork, higher prices for U.S. and Canadian chilled pork cuts in 2014 could further dampen Japan’s retail and food service demand. Japan’s 2014 processing demand for frozen pork cuts is projected to continue at the 2013 level, matching anticipated solid demand for processed pork products