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Home / World / China's pork shortage could give US farmers a chance to make money

China's pork shortage could give US farmers a chance to make money



Pigs raised by farmers will be seen on December 5, 2018, in Linquan County, Fuyang, Anhui Province, China.

Visual China Group | Getty Images

PEKING – China needs more pork imports than ever before, as the country is struggling with the outbreak of a swine disease – and this could become a business opportunity for US farmers if both countries can reach a trade agreement.

African swine fever hit Chinese pig farms in the past year and caused a severe shortage of meat, which is a staple food for hundreds of millions of Chinese households.

Prices have nearly doubled, and publicly available data suggest that China's pork production is likely to hit this year Demand drops by a few million tonnes.

In December, one kilogram of pork costs about 22.50 yuan or $ 1

.46 per pound, according to BRIC-Agri Info from Beijing. Last week, one kilogram of pork, according to the Ministry of Commerce, had risen to 42.46 yuan or $ 2.75 a pound.

At the same time, in ongoing trade negotiations, the US is calling for China to make purchases of US $ billion worth of American agricultural products. At the end of the last round of trade talks last week, US President Donald Trump said China has agreed to a "very large Phase 1 deal" that includes purchases of about $ 40 to $ 50 billion of US agricultural produce. Beijing has not publicly confirmed the number yet.

China Buys US Agricultural Products

The gradual course of the agreement encourages the Chinese side, said He Weiwen, a member of the Executive Council of the China Association of International Trade, which comes under the direction of the Ministry of Commerce.

According to a CNBC translation of his Mandarin-speaking remarks, the Chinese will show their sincerity by increasingly buying American agricultural products.

However, there is a catch. It is becoming increasingly clear that Beijing wants to urge the US to eliminate Chinese multi-billion dollar tariffs.

"If China has promised to buy agricultural products, but the US will only postpone the additional duties," said he, "if it's picked up, it makes little sense for China." This is the crucial point. "

Am On Thursday, Chinese Trade Ministry spokesman Gao Feng said Beijing wanted the US to eliminate all additional tariffs to reach a final agreement on trade Gao noted that Chinese companies are increasing their purchases of US agricultural products in line with market needs and market-based principles and that the two trade delegations remain hoping to reach a gradual agreement agreement as soon as possible.

"I think there will be talks about buying more pork," he said earlier in the week, noting that he does not speak on behalf of the Chinese government. Soybean deficiency is not that big. China can handle this by adjusting the feed formula. "

In China soybeans are being used as animal feed, and a shrinking herd of pigs is curbing the demand for oilseeds.

China's import of US pork accounted for about

US pork According to CNBC analysis of Chinese customs data of BRIC Agri-Info Group's Chinese meat imports fell to 14% in 2017, about the same level as last year.

This share fell to 8% in 2018, when trading tensions escalated. Analysis showed that US pork market share of about 8% as of May 2019, which was still well below pre-war levels.

] US market share of Chinese pork imports in% per annum

Source: BRIC Agri-Info, China Customs

This gap may create an opportunity for American farmers, for example, from the country's largest pork producing state USA, Iowa.

Pork prices remain high for the time being

China's pig shortage is likely to continue for several months, if not longer. On Thursday, China's Ministry of Agriculture and Rural Affairs announced that it expects pig prices to remain high during the New Year holidays and Chinese Spring Festival at the end of January 2020, according to a press conference from the Wind Info financial database.

] Authorities have also released pork from national reserves to remedy the shortage.

Research analyst of supply chain data company Panjiva, Chris Rogers, also pointed out that Chinese imports of US agricultural products, which were subject to retaliatory tariffs, increased by 317% per year to US $ 8.3 billion in August -Dollar. "(The increase) suggests that Chinese purchases will be aggressively increased even before the new contract is signed," Rogers said.

However, it is not self-evident that China's increased demand for pork will lead to further purchases from the US. [19659002] "China will import from all its trading suppliers, including the US, but the American price must also be competitive," he said. "There were cases when the transaction price was not competitive in the market and the company had to stop buying."

Chinese pork producers such as Muyuan also saw their stock prices skyrocket as traders set higher profits.


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