US - H@ms Marketing Services warns any disruption in US pork exports to Mexico as a result of the planned renegotiation of NAFTA, will negatively affect North American live hog markets, writes Bruce Cochrane.
US President Donald Trump has withdrawn the US from the Trans-Pacific Partnership and plans to renegotiate the north American Free Trade Agreement.
Tyler Fulton, the director of Risk Management with h@ms Marketing Services, says there was so much uncertainty over whether or not the TPP would be ratified anyway that, while disappointing, it's demise will not impact current cash or futures values but, the renegotiation of NAFTA is probably the source of the greatest uncertainly in hog markets today.
Tyler Fulton-h@ms Marketing Services:
With Trump's focus on renegotiating, in particular with Mexico in trying to get a better deal, I think it threatens the current trading relationship and it could lead to a defacto trade war.
In the event that happens, I think, pork sold from the United States into Mexico would probably be among the first things that Mexico would apply a tariff to.
As it sits right now Mexico consumes roughly eight percent of all American pork produced and so, if anything came to disrupt that trade, I think we would probably immediately feel some price implications in the cash market.
As the story develops on the NAFTA renegotiation, I think that is something that's being factored in quite quickly into pork markets and are something that is kind of limiting gains that otherwise we would probably be looking at.
Fulton says, Because of uncertainty over NAFTA, there's a lot of uncertainty as to whether or not we can expect gains in exports, in particular to Mexico, but also to other countries to be maintained as we've seen over the last two months.
ThePigSite News Desk