Source: Tom Johnston, MEATINGPLACE, 4/23/18



China’s recently imposed retaliatory tariff on U.S. pork could cost U.S. pork producers between $6 and $8 per head, according to Rabobank analysts.

The China-U.S. trade dispute exemplifies the many uncertainties that the firm’s Pork Quarterly Q2 2018 report said will challenge the global pork trade this year. African swine fever in Europe is another one of them. Ultimately, agility will be key for producers to navigate what appears to be a softening market, the report says.

Rabobank expects China’s 25 percent tariff on U.S. pork and pork variety meats to weigh on markets in the near term, as China accounted for 12 percent of all U.S. pork and pork variety meat exports in 2017. China targeted U.S. pork, among other American products, after President Donald Trump announced steep tariffs on Chinese steel and aluminum.

The wild card is whether China opts to crack down on U.S. pork variety meats shipped via Hong Kong. But with few alternate markets for U.S. pork variety meats, producers could see at least a $2-to-$3-per-head loss from variety meats alone. In total, the loss of the Chinese export market alone could cost US producers $6 to $8 per head, Rabobank projects.

January U.S. pork exports to all destinations grew 5 percent year on year, but more recently shipments slowed due to uncertainty over China’s retaliatory tariffs.

“We expect no meaningful exports to China in light of announced tariffs, but expect to recoup a portion of lost sales in alternate markets,” the Rabobank report notes.

South Korea, the third-largest U.S. export market, is a bright spot. Renegotiation of the KORUS trade pact should spur demand into this and neighboring Asian markets, the firm said.

Critical now is the success of NAFTA talks. More than 40 percent of all U.S. pork exports go to Mexico and Canada.

For more stories, go to www.meatingplace.com