November 1, 2019

African swine fever affecting US meat markets

China is increasing imports for meat after the devastating African swine fever (ASF) swept the country, and this has affected trade flows and created worry over market volatility, reported Bloomberg.

The US market has been shielded from ASF thanks to trade barriers and the US-China trade war. China's depleting pork supply has resulted in price hikes not only for swine, but also for other meat products like poultry and beef as the country ramps up imports.

Swine futures for December settlement fell the most on the Chicago Mercantile Exchange, with a 9.1% drop this month. US farmers have increased swine production, but China has purchased US swine product irregularly - contributing to higher volatility in swine futures. 

Jayson Penn, chief executive officer of Pilgrim's Pride said the poultry contracting season is slower this season, adding that sellers aren't willing to forward price even as fast food chains are scouting for beef contracts.

He also mentioned a slowdown in imports of Australian beef trim to the US, as Australia shifts its focus to rising demand in China. This has affected the burger market.

The recent US-China partial trade deal, which lifted a ban on certain US imports, saw increased prices for chicken-leg quarters. These are produced for the US market but is now a popular export.

Penn said poultry prices may increase the next two months – possibly overtaking 2014 numbers in exports to China if the latter cancels a ban on US poultry. Pilgrim's Pride shipped 90,700 tonnes of poultry to China in 2014. Pilgrim's Pride is the second largest poultry producer in the US.

Current depressed prices will most likely see demand for breasts and leg quarters increase. Chicken feet remains the biggest poultry product export to China.

-    Bloomberg