Export markets came in as the biggest concern on pork producers’ minds this week, followed by foreign animal disease in this week’s Farm Journal PORK’s online poll.
56% of our Farm Journal’s PORK audience are concerned about how export markets will be affected in 2019. U.S. pork currently faces retaliatory duties in two markets: China and Mexico. China’s duty rate on pork muscle cuts and variety meat increased from 12 to 37% in April and from 37 to 62% in July. Mexico’s duty rate on pork muscle cuts increased from zero to 10% in June and jumped to 20% in July (pork variety meats continue to enter Mexico duty-free). Beginning in June, Mexico also imposed a 15% duty on sausages and a 20% duty on some prepared or preserved hams and shoulders.
“Pork exports have posted an impressive performance in 2018, but the retaliatory duties are a clearly a significant obstacle,” U.S. Meat Export Federation’s President and CEO Dan Halstrom explains. “The fact that U.S. trade officials were able to secure duty-free access for U.S. red meat in the new U.S.-Mexico-Canada Agreement is critically important, and we are hopeful that duty-free access for U.S. pork entering Mexico will be restored soon. Tariff relief in China may not come as quickly, but USMEF continues to work with industry partners to keep as much product as possible moving to China while also working aggressively to expand exports in other key markets, including Korea, Central and South America, the ASEAN region and Australia.”
Foreign Animal Disease
The U.S. is on high alert to make sure several foreign animal disease (FAD) threats stay outside U.S. borders. Pork producers and swine veterinarians are on the front lines of the African Swine Fever (ASF) surveillance plan. Last month, USDA and FDA officials met with U.S. pork sector groups, including the American Association of Swine Veterinarians, the National Pork Board, the National Pork Producers Council and the Swine Health Information Center, to evaluate additional measures to prevent the spread of ASF to the U.S.
Meanwhile, Classical Swine Fever (CSF) was identified last month on a farm located at Gifu Prefecture, in the central area of Japan, killing 80 pigs. The last CSF outbreak in Japan was in 1992. In 2007, the use of vaccination was banned and disease eradication was declared. Unrelated to ASF cases in China, CSF does present similar clinical symptoms with mortality rates of nearly 100%.
Domestic demand is an important piece of the puzzle, says Scott Brown, associate extension professor at the University of Missouri. The market demand for beef is strong, Steiner says, but that competitor is certainly not depressing pork prices. However, the poultry industry has had significant problems, especially with boneless, skinless breast meat prices.
“We’ve seen strong domestic demand across the board for all meats,” Brown says. “However, if the economy were to turn south, or we talked about the ‘R’ word in 2019, I’d be worried about what happens on the domestic use side—that could be troubling to hog prices as we look ahead.”
Swine finishing feed costs are expected to be about 2 to 3% higher for the fourth quarter of 2018 and for 2019 than it was for 2017, says Michael Langemeier of the Center for Commercial Agriculture at Purdue University.
“Given the recent volatility of corn and soybean meal prices, it is important to gauge the impact of changes in these prices on feed cost,” Langemeier says. “Each $0.10 per bushel change in corn price changes feed cost by $0.46 per cwt. Similarly, each $10 per ton change in soybean meal price, changes feed cost by $0.34 per cwt.”