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Increased pork supplies expected to result in price discounts in fourth quarter

18 June 2018, at 12:00am

The Director of Risk Management with [email protected] Marketing Services predicts higher US pork supplies will result in discounts in the price consumers pay for pork

A 25 percent duty imposed by China on US pork and a 10 percent duty imposed by Mexico that will rise to 20 percent in July, has created considerable uncertainty heading toward the fourth quarter when US pork production is expected to be about five percent higher than one year ago.

Tyler Fulton, the Director of Risk Management with [email protected] Marketing Services, says demand, both domestic demand and export demand, will be a critical factor.

Fulton explains:

"I would say that the current focus is on the impact of the 20 percent tariff that will be applied to pork, in particular hams and pork shoulders that go to Mexico.

"Because it's such a significant player in pork exports, it could have a pretty significant impact on the market.

"It's important not to over-state it however – I think you need to put it in context.

"The supply increases that we're seeing far exceed the weight of any one export country. Mexico does represent around seven percent of total US pork and so, if you apply a 20 percent tariff on that, there's no doubt it's significant but it wouldn't likely result in double digit percent losses in price".

Fulton says on the domestic side a lot depends on the US economy and how pork compares in price with some of the competing meats like beef and chicken.

He says pork is still well positioned with domestic demand and is in good shape but there is the expectation that North Americans will consume possibly one and a half pounds more pork this year than last year and that will likely command discounts to clear the heavy supply.

As reported by Bruce Cochrane, Farmscape

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