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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

ASF Influencing U.S. Pork Price

11/25/2019

Noel White the CEO of Tyson Foods, recently commented that the unseasonal rise in the domestic price of pork is attributed to African swine fever in China and Eastern Europe. It is evident that international meat markets are now influenced by the disparity in supply and demand for pork in China. Companies in the U.S. expected to benefit include Seaboard Corp., JBS USA and Smithfield Foods controlled by the WH Group of China. Analysts are upgrading companies producing pork in anticipation of increased demand and margin.

Pork producers in Europe and Brazil have benefitted more from the situation in China than their counterparts in the U.S. This is due to tariffs imposed by China on imported U.S. pork as a result of the trade dispute initiated in 2018. Notwithstanding the additional cost of the tariffs, exports from the U.S. are expected to climb. It is possible that importers controlled by the Government of China receive exemptions from U.S. tariffs. The shortage of pork in China could become more than an inconvenience and result in an embarrassment for the regime. The effect of African swine fever is noted in the data relating to exports from the U.S. From January to September 2019, exports of pork to China and Hong Kong combined were up 47 percent from the comparable period in 2018. Lean-hog futures on the CME are 12 percent higher from September.

Increases in the price of pork in the U.S. will inevitably lead to a rise in broiler prices. This trend will be intensified when U.S. integrators commence exports to China.


 
Copyright 2019 Simon M. Shane