Source: Rita Jane Gabbett, MEATINGPLACE, 11/7/17



The Montana Stockgrowers Association confirmed to Meatingplace its involvement in a deal first reported by the Wall Street Journal under which China’s e-commerce company JD.com plans to import about $1.2 billion worth of U.S. beef and pork over three years.

The agreement is expected to be announced during President Donald Trump’s trip to China this week. A Montana Stockgrowers Association representative is in China for the signing ceremony.

The WSJ reported the pork deal is expected to go to Smithfield Foods, which did not respond to a Meatingplace request for comment.

It was not clear how the dollar value would be split between beef and pork.

A big deal
Mizuho Restaurant and Proteins analyst Jeremy Scott said the deal should boost beef and pork packer margins.

“A deal of this magnitude into China's rapidly growing grocery delivery market, which we expect will be primarily incremental (particularly on beef), should represent an annual tailwind of 2.5 percent to 3 percent (in U.S. dollars) to combined beef and pork exports,” Scott wrote in a note to investors.

He noted that U.S. producers have exported about $13.5 billion in beef and pork globally over the past 12 months, of which about 17 percent went to China, Hong Kong and Taiwan.

Scott said such a deal could help ease concerns about an oversupply in the context of the recent ramp-up of pork processing capacity in the United States, as well as stem or delay liquidation of the U.S. cow herd at a critical point in the cattle cycle.

In May, the White House announced that China had agreed to open its market to U.S. beef by mid-July after being closed for 14 years after a case of bovine spongiform encephalopathy that occurred in the state of Washington in December 2003.

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