May 30, 2018

US pork producers say goodbye to $2.2B in lost opportunities in China

US pork producers have lost $2.2 billion on an annualised basis due to events leading up to and following China's 25% punitive tariffs in retaliation for US tariffs on aluminum and steel, according to an Iowa State University economist.

Dermot Hayes said that since March 1, when speculation about Chinese retaliation against US pork began, hog futures have dropped by $18 per animal, translating to a $2.2 billion loss on an annualised basis.

"While not all of this lost value can be attributed to trade friction with China, it is certainly the main factor", Hayes said.

The market disruption caused by export market uncertainty comes at a time when US pork is expanding production to record levels, the National Pork Producers Council (NPPC) noted.

Five new pork processing plants recently opened or would soon begin operations, increasing US pork production capacity by around 10% from 2015 levels by next year, NPPC said.

It said exports accounted for more than $53 of the average $149 value of a hog last year. The US has, on average, been the top global supplier of pork over the last 10 years.

Last year China/Hong Kong was the second-largest importer of US pork in terms of volume at 1.09 billion pounds and the third-largest in value at $1.078 billion.