After US President Donald Trump announced tariffs on aluminum and steel imports, which took effect Friday, he announced his intention to slap additional tariffs on $60 billion worth of Chinese products for intellectual theft over the last several years. The decision is causing concern in agricultural circles.
In response, China released a proposed list of 128 US products in line for reciprocal tariffs amounting to $3 billion. The list includes a 25% tariff on US pork and 15% tariffs on US steel pipe, fresh and dried fruit, nuts and modified ethanol.
Many market pundits were quoted in the news as saying the Chinese response to the US tariff proposals was muted, and some point out that Chinese tariffs on US goods would hurt their own businesses since some US companies are owned by Chinese corporations.
As a result, it’s difficult to tell exactly how much the tariffs would affect the economies or industries of the two countries. As it stands, each country has toed the line and refuses to back down.
Stock traders are worried. Prices of many corporations fell on Friday with the announcements. Many agricultural groups also are worried, including the National Pork Producers Council, the National Corn Growers and the American Soybean Association and the National Association of Wheat Growers.
LEAN HOG FUTURES DROP
Lean hog futures fell in the US after China announced its own 25% tariff on pork imports from the US. And while there were other things that purportedly pressured hog futures on Friday, the item getting the most press is the threat of Chinese tariffs.
China is far and away the world’s largest pork consumer, and as a result is the world’s top pork importer as well. USDA data indicate China imported 1.65 million tonnes of pork last year, much of it from the US.
The US Meat Export Federation said in a release that China’s threatened tariffs on US pork were “cause for great concern in the pork industry. China is a price-sensitive market, so any tariff rate increase would affect the competitive position of US pork.
“China is a key market for US pork and especially for pork variety meat,” the USMEF went on. “In 2017, the US industry exported 309,284 tonnes of pork and pork variety meat to China, valued at $663.1 million – our third largest international market by volume and fourth largest by value. For variety meat exports only, China was our largest destination in volume (181,351 tonnes) and value ($425.2 million). China accounted for more than one third of US pork variety meat exports last year.”
But China’s threatened tariffs on US pork may be coming at an opportune time for them. Market analysts say Chinese domestic production is growing, and higher prices could accelerate this growth.
CATTLE, BEEF RECAP
A total of 166 head cattle sold Wednesday on the Livestock Exchange Video Auction at $125.63 per cwt, down $98.63 from a week earlier.
Cash sales last week were at $124 to $126.50 per cwt on a live basis, down $1.50 to $2 from last week. Dressed-basis trading was $200 to $203, down $4 to $5.
The USDA’s choice cutout Friday was down $2.12 per cwt at $223.09, while select was off $1.62 at $216.40. The choice/select spread narrowed to $6.69 from $7.19 with 75 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Thursday, was $137.98 per cwt, down $1.41. This compares with Friday’s Mar settlement of $135.70, down $1.82 and Apr’s close of $136.10, down $1.92.