Analyst Explains Why EU Plays a Big Role with China's Pork and ASF

April 11, 2019 09:27 AM
 
 

The lean hog markets are seeing huge swings the last couple of trading sessions. Lean hogs opening in the green during Thursday’s trade session as well.

There are a lot of factors as to why the market has fluctuated. There is an outbreak of African swine fever reported in South Africa this week. In addition, the National Pork Producers Council is cancelling the 2019 World Pork Expo as a cautionary measure to prevent the spread of ASF.

One analyst says there are other reasons driving the market too. One reason is a redistribution of hogs in the United States, especially with the new additional plant in Iowa.

“There are a lot of hogs that were initially programmed to go to that plant that had been in the open market that were pulled off once they started processing,” said Don Close, Senior Animal Protein Analyst with Rabo Agri Finance “That combined with the building and pent up energy with the uncertainties with China, when those two factors arrived at the same time, was the stimulus for the earlier than expected rally in hog prices.”

Close says 70 percent of the pork imports into China are currently coming from the European Union. That plays a major role in the ASF story.

“If we see any complexities or worsening with the disease going into Western Europe, it could cause an incredibly bullish scenario for pork in the United States,” said Close.

AgDay Betsy Jibben talks with Close in this clip.

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