3.23.18 Bloomberg: China Targets US Pork
Since the government of China owns Smithfied, and is the largest hog producer and hog processor in the U.S. and in the world, will they put a tariff on their own in house production?
How does that cash flow stream work?
John K. Hansen, President
Nebraska Farmers Union
1305 Plum Street, Lincoln, NE 68502
402-476-8815 Office 402-476-8859 Fax
402-476-8608 Home 402-580-8815 Cell
China Targets US Pork
March 23, 2018 08:34 AM
(Bloomberg) — China struck back at U.S. import tariffs with its own set of reciprocal ones targeting, among other products, pork.
The world’s biggest pork producer, consumer and importer is planning a 25 percent tax on U.S. pork imports, the Ministry of Commerce said in a statement on Friday. The tariffs would be in addition to current duties.
China’s plans for reciprocal tariffs on $3 billion on products from pork to wine come in response to steel and aluminum duties ordered by U.S. President Donald Trump earlier this month. Agricultural commodities could be a feature of any ongoing tit-for-tat trade war. China is already investigating sorghum imports from the U.S. and people familiar with the matter said last month that the country was studying the impact of restrictions on U.S. soybeans, used to feed the Asian country’s pigs.
“China is showing its capacity to fight back,” said Monica Tu, an analyst at Shanghai JC Intelligence Co. The measures aren’t expected to “impact fundamentals a lot,” she said, as imports from the U.S. only account for about 14 percent of China’s purchases.
Still, China and Hong Kong combined is the second-biggest market for U.S. pork, according to the U.S. Meat Export Federation. Analysts at Vertical Group said this week that U.S. pork was an “ easy target” for China, citing a decline in its domestic pork and hog prices.
The National Pork Producers Council warned that possible Chinese tariffs on U.S. pork could have a significant negative impact on rural America. “No one wins in these tit-for-tat trade disputes, least of all the farmers and the consumers,” said NPPC President Jim Heimerl, a pork producer from Johnstown, Ohio.
WH Group Ltd., the world’s largest pork company, dropped 4.7 percent. The company acquired U.S. pork and hog producer Smithfield Foods Inc. in 2013. Shares of Muyuan Foodstuff Co., the country’s third-biggest pig breeder, rose 0.6 percent. Guangdong Wens Foodstuffs Group Co., the largest pig breeder, advanced 3.7 percent. New Hope Liuhe Co., China’s top animal-feed producer, added 0.1 percent. Jiangxi Zhengbang Technology Co., a feed producer, increased 2 percent.
Soybean meal on Dalian Commodity Exchange climbed as much as 4.3 percent to 3,128 yuan ($494) a metric ton before closing 1.5 percent higher at 3,046 yuan. The surge reflects concerns that an expansion in tariffs could impact the supply of U.S. soybeans to China, according to Tu.
A consolidation of China’s pig industry has seen small farms shut due to environmental concerns, while large-scale operations are expanding. The country’s pork imports are forecast to decline in 2018 as an increase in domestic production reduces the need to buy meat from overseas, according to the U.S. Department of Agriculture.
“When it comes to trade, we expect all countries to follow international rules and to trade fairly,” Heimerl said. “We also expect all countries to resolve trade disputes in a way that doesn’t harm businesses, farmers and consumers.”