Pork export sales are up. USDA-Foreign Agricultural Service reports net sales of 90,700 metric tons (MT) of pork for the period of March 29 to April 4, 2019. This is up noticeably from the previous week and from the prior four-week average.
Increases were reported for China at 77,000 MT, South Korea at 3,600 MT, Chile at 2,900 MT, Japan at 2,200 MT, and Canada at 1,100 MT. Exports of 27,500 MT were up 1% from the previous week and 3% from the prior four-week average.
The primary destinations were Mexico at 7,200 MT, South Korea at 4,900 MT, China at 4,000 MT, Japan at 3,300 MT, and Australia at 1,800 MT.
“The huge jump in sales to China appears to confirm rumors that COFCO (a government-owned company) is buying U.S. pork for the national reserve,” says Dermot Hayes, distinguished professor in agribusiness at Iowa State University. “COFCO typically buys split carcasses when the meat is destined for the reserve. China will need huge quantities because it has lost 25% to 35% of its production to African swine fever.”
Hayes says COFCO probably has people in the U.S. right now arranging additional sales. Because they are government-owned, he believes they can avoid the retaliatory duty of 50%. If not, Hayes says they should have purchased this pork in the EU.
“The impact of these purchases has already been reflected in the futures market,” Hayes says. “When this meat is sourced, it will drive cash prices up to reflect the futures price.”
Hayes expects huge purchases by the Chinese private sector this fall if the duties are removed.
“I had been concerned about a surplus of pork this fall and now it appears that we will have a deficit,” he says.