Trade uncertainty and African swine fever top the list of the biggest game changers of 2019 in a recent PORK Poll. Topping the poll this month is trade with 36% of respondents saying the uncertainties surrounding trade could swing the marketplace either direction in the year ahead.
“I’m optimistic that we will get these trade differences settled,” says Chris Hurt, Purdue University agricultural economist. “The signing of the U.S.-Mexico-Canada (USMCA) trade agreement calms trade conflicts with Mexico and Canada, although it still needs approval in each country. In addition, it leaves in place the U.S. tariffs on steel and aluminum. It was these tariffs that caused Mexico and Canada to place restrictions on U.S. pork. Those tariffs still need to come off.”
Hope for a cooling of the trade conflicts with China are potentially supportive to hog prices, Hurt adds.
“China needs food, so if we come up with a big trade package with China that says they’ll buy $70 or 80 billion in total goods from the U.S., some of that will be ag and some will be pork,” he says. “I think that feels pretty positive right now.”
Meanwhile, 30% said African swine fever was their pick and 24% said too many hogs in the marketplace.
Hurt agrees that ASF is a significant factor, but we still can’t determine the magnitude. China is such a large market and primarily produces its own pork – 97% of the pork consumed in China is produced there, Hurt says. If China loses 1% of its hogs to ASF, it will need to increase imports by about 33% to cover that tonnage.
“That gets the world pork market excited and that will drive prices higher,” Hurt says. “Will it come from the U.S.? That doesn’t make a difference. If it comes from other countries, then we will get a benefit even if they don’t buy from us.”
Increased input cost, cash hog basis and expansion rounded out the poll, capturing a small percentage of the votes. Check out www.porkbusiness.com to participate in our PORK polls and let us know what you think about issues relating to the pork industry.