CME: US Govt Attempts to Shore Up Pork Prices
US - US and Chinese negotiators reached agreement on Thursday that will allow US pork back into the Chinese market, write Steve Meyer and Len Steiner.There still appears to be some details to be hammered out
but USDA and the office of the US Trade Representative, in a
press release, stated that “Pork trade will resume immediately
once both sides finalise the export documentation.“
China and Honk Kong (the two markets must be viewed
in total, we think) purchased 851.4 million pounds, carcass weight,
of US pork products in 2008. That number dropped to 372.1 million
pounds (56 per cent) last year. A good portion of that decline was
due to H1N1 restrictions but it is important to note that shipments to
China actually never went to zero and that shipments through April
(H1N1 became a problem late in that month) were already 64 per cent
lower than in 2008.
So, while a solution to H1N1 trade restrictions is good, it
will not likely return US shipments to the go-go days of 2008.
China has rebuilt its swine breeding herd from the devastating
losses to disease, harsh winters and an earthquake in 2006 and
2007. In fact, the government has been trying to shore up pig
prices by buying pork and putting it in storage. Further, the Olympic
games are gone and the incentive to keep the population happy
is lessened. US exports will almost certainly increase from January’s
paltry total of 20.5 million pounds but don’t expect the better
part of a billion pounds to go to China this year unless something
major hampers China’s pork producing ability.