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CME: US Govt Attempts to Shore Up Pork Prices

by 5m Editor
22 March 2010, at 6:21am

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.