Pork exports are of particular importance to the U.S. domestic pork and hog markets because a greater share of domestically produced pork is exported, in comparison with other meats such as beef. On average over the last decade, 23% of pork produced in the United States was exported, compared to only 11% of beef and veal.

Due to a higher percentage of pork exported from the U.S., international markets are also more sensitive to the U.S. pork supply chain. Pork prices are often affected by domestic seasonal trends as well as market conditions like international demand, livestock diseases or trade policy.  CME Group introduced Pork Cutout futures to allow market participants to manage risk further down the U.S. hog supply chain. While CME Lean Hog products reflect prices paid for hogs in the U.S., CME Pork Cutout products reflect prices paid for U.S. wholesale pork.

Mexico is the largest contemporary recipient of U.S. pork by volume, taking 5.5 million metric tons of swine meat over the past decade (2012-2021), or 31% of total U.S. pork exports by volume, according to UN Comtrade. Mexico took 734 million kg of pork, or more than 33% of total U.S. exports in 2021, up from 571 million kg (24% of exports) in 2020 and 556 million kg (28%) in 2019. The rebound of the U.S.-Mexico pork trade in 2021 is attributable in part to a healing of the U.S.-Mexico trade relationship after tariffs were imposed on Mexican imports in 2018.

The levy of Section 232, which initiated tariffs on Mexican imports on the grounds of national security, resulted in retaliatory tariffs imposed by Mexico on U.S. imports. Mutual tariffs dampened trade flow, including that of U.S. pork exports to Mexico. Exacerbating Mexico’s ability to import U.S. pork, the COVID-19 pandemic weighed on the Mexican Peso in 2020. Last year’s improved trade relative to prior years reflects the resolution of the previously protectionist tariffs, as well as Mexican economic recovery post-2020.

The top five export destinations for U.S. pork in 2021 by volume were, in order: Mexico, China, Japan, Republic of Korea and Canada. Together these countries comprised 79% of U.S. exports. Over the past decade in volume, U.S. exports to China surpassed exports to Mexico in only one year: 2020. In that first year of the COVID-19 Pandemic, African swine fever (ASF) severely affected China’s domestic hog production, creating demand for imported hogs and pork products.

Though a depressed Mexican Peso, which caused U.S. meat prices to rise in Mexico thus reducing consumption, freed U.S. meat for alternate export destinations, China’s hunger for U.S. pork drove domestic exports to their highest share relative to production in the last decade. In 2020, the U.S. exported almost 26% of its domestic production, compared to 23% on average, 2012-2022. The highest proportion of U.S. pork exports by value has gone to Japan each year of the past decade, driven by the highly valued cuts that the country receives. 

Export demand plays an important role in U.S. pork markets, so any major shifts pertaining to top U.S. export destinations, whether geopolitical or fundamental in nature, can have an impact on price. Furthermore, U.S. pork prices, both current and expected, can have an impact on export demand.

Billions of pounds of pork and variety meat products shipped abroad annually are exposed to price fluctuations in U.S. hog and pork markets. Lean Hog and Pork Cutout futures can enable both domestic and international buyers exposed to U.S. prices to manage the risk that comes along with unanticipated price moves and protect their bottom line.