China's Trouble with Disease Could be Blessing in Disguise for Hog Industry as Market Pressure RisesTue, 20 Nov 2018 18:06:57 CST
In a recent conversation with Christine McCracken of RaboAgrifinance, Radio Oklahoma Ag Network Farm Director Ron Hays enquired about how much of an impact the Trump Administration’s trade policies have had on the agricultural sector. According to McCracken, several commodities have suffered from the White House’s game of hardball with many of our nation’s international trading partners in an attempt to coerce their cooperation in commerce. In particular, McCracken says the pork industry has been hit hardest by the economic fallout that has resulted.
“Despite the fact that we’ve come to an agreement on USMCA, we aren’t seeing any change in the tariffs that have been applied to the pork industry. So, the industry is still facing restrictive tariffs on exports to Mexico which is our No. 1 export market,” McCracken said. “Those are 20 percent at the moment. That’s all just coming on the price of the hams going to Mexico. So, the industry is really struggling on the price side. But, the volumes are still moving which is good news.”
Mexico has left its tariffs in place in response to the fact that the US has yet to lift its levies on steel and aluminum products. McCracken says that Washington isn’t willing to budge on that yet, though there could be movement seen in early 2019. In the meantime, she says given the geographical proximity of the two nations, the superior quality of American pork and its relatively competitive price even with the tariff - US pork is still doing remarkably well going into the Mexican market, all things considered.
Obviously, China is a major source of concern right now as well. Historically, China is a smaller market for the pork industry, but she admits the opportunity there is quite large - given the issues the Chinese have at present with disease in their country targeting the pork industry there. McCracken says that situation is not likely to change any time soon, which could allow the US a chance to fulfill their pork supply needs in the future.
“We don’t really know how many hogs have been lost to date. We do know that there’s been now 59 confirmed cases in China and nearly every province in China with the exception of one large hog producing region,” she said. “That’s putting a lot of pressure on hog markets there and we think it will lead to some liquidation. So, it’s a really tragic situation for them but it could be a big opportunity for US producers longer term.”
That is welcome news to an industry, which McCracken says is unfortunately not making much money right now. But, the reality of the situation is, there is no definite answers as to when we could see this expected export demand show up in the marketplace. At the same time, domestically, a record number of hogs are being slaughtered and McCracken says the market will soon start to feel the pressure to move product as it competes with likewise large supplies of both poultry and beef.
“We expect some near-term pressure on prices, but that’s to be expected,” she said. “The big question is how long will that last?”
Listen to McCracken answer more of Hays’ questions regarding the pork industry and her market outlook for 2018-2019, by clicking or tapping the LISTEN BAR below.
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