Pork pricing dynamics – tariffs & African swine fever

Pork Pricing Facing Global Headwinds

The discussion started with an overview of the global situation. The US saw the construction of several large pork-processing facilities, with two opening in late 2017. At the time, the extra capacity meant that hog prices went down. Soon after, the trade war with China started, which caused price negotiations with customers there and the loss of some contracts. In 2018, the first case of ASF was reported, which spread internationally. 

Between the first case and 2-3 months before this Interview, ASF has been found in every province in China. It’s also been detected in Vietnam and South Korea, as well as a handful of cases in Belgium, which means that Germany and Denmark are at risk. As ASF is almost always fatal, “this is a very real and very significant issue for the global pork industry.” 

The repercussions of ASF could be substantial. About 20% of China’s pig stock was affected, and this country alone makes up nearly two-thirds of global production. Consequently, the specialist thinks, “there will be a new normal for pork prices”, as other countries might not be able to scale up and it’s unclear if affected Chinese farmers will continue to farm pigs in the future. 

Another topic covered was US-China trading dynamics. Despite the tariffs, Chinese businesses are still importing US pork, as well as increasing shipments from Europe. It is unclear when there will be a resolution to the tariffs, especially as it includes other goods. However, other markets are opening up for America: “there are other, especially Asian, countries that are looking to grow their volume that they buy out of the US just because of the quality and the consistent capability of both the hog farmer and the US processor to produce pork that’s desirable.”

To access all the human insights from Third Bridge’s Pork Pricing Dynamics – Tariffs & African Swine Fever Interview, click below to view the full transcript.