CNBC reported Monday that the Trump Administration is planning tariffs on a remaining $257 billion in Chinese goods if talks between President Trump and Chinese President Xi fail.
Some analysts have blamed the possibility of failure in those talks for triggering the latest profit-taking move in the US stock market.
At the same time, an analysis of the situation in Illinois Farm Policy News says the current trade war may be more than “a short-term hiccup” for agriculture.
Farm Policy News said Jacob Bunge and Lucy Craymer reported on the front page of Friday’s Wall Street Journal that, “China has the world’s biggest appetite for pork. It’s such a beloved staple that the written Chinese character for ‘home’ depicts a pig inside a house. US producers banked on that business being around for years.
“That’s changed,” the pair said. “As a result of the Trump administration’s clash with Beijing over trade, China’s tariffs on US pork have climbed as high as 70%, making US imports more expensive. At the same time, an outbreak of African Swine Fever in China has increased demand for imported pork.”
And here’s the tariff rub for US pork producers: The WSJ said “to fill the void, Chinese customers are increasingly looking to companies in Europe and South America to fill their orders—and those companies aim to turn that opportunity into long-term business. The shift raises the prospect of not just a short-term hiccup for American hog farmers, but a fundamental realignment in the global supply chain in one of the world’s hungriest markets.”
A HUGE MARKET OPPORTUNITY
Bunge and Craymer spelled out the Chinese pork market in dollars and cents from USDA data. Consumers there eat 123 billion pounds of pork annually. In a nation of 1.41 billion people, this translates to about 87 pounds per capita this year, up about 30% since 1998.
For comparison, per capita pork consumption in the US was expected to be 51 pounds this year, little changed from 20 years ago, the article said.
The WSJ article said, “China’s pork imports swelled to 3.6 billion pounds last year, nearly 10 times more than a decade ago, the USDA says. The surge has encouraged producers in other countries, including the $200 billion US meat industry, to spend hundreds of millions of dollars on gigantic, state-of-the-art slaughterhouses to help fill that demand.”
China’s hog production also was ramped up as the government pushed to consolidate domestic production into giant commercial operations, the authors said. This pressured prices to a four-year low in May.
But African Swine Fever pushed pork prices to their highest level in a year just after China imposed retaliatory tariffs on US pork. These tariffs even have some analysts questioning the future of US-China pork trade.
CATTLE, BEEF RECAP
Cash cattle traded early last week at $111 to $112 per cwt on a live basis, up $0.50 to $1 from the previous week, and at $174 to $175.50 dressed, steady to up $0.50. Then on Friday, cattle traded at $114 to $115 live, up $3.50 to $4, and at $180 dressed, up $5 to $6.
The USDA choice cutout Tuesday was up $1.52 per cwt at $215.28, while select was up $1.77 at $202.88. The choice/select spread narrowed to $12.40 from $12.65 with 57 loads of fabricated product sold into the spot market.
There were six steer delivery tenders at zero but no other retenders, demands or reclaims Tuesday.
The CME Feeder Cattle index for the seven days ended Monday, was $153.66 per cwt, up $0.10. This compares with Tuesday’s Nov settlement of $152.17, down $1.72.