First Quarter Pork Exports to China Up 300% But Forecast Is Uncertain

01:15PM Jun 02, 2020
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Despite headlines of a buying freeze, China is purchasing soybeans. State-owned firms bought at least three cargoes of U.S. soybeans on Monday, according to Farm Journal Washington Correspondent Jim Wiesemeyer. USDA reported export sales of 132,000 metric tons of soybeans for delivery to China during the 2020-2021 marketing year as well.  

However, this news occurs as reports swirl about Beijing’s order to put a freeze on American farm goods of soybeans and pork.

We have seen the same unconfirmed reports and are working to confirm,” said the National Pork Producers Council in a statement. “We are skeptical of these reports as China is in serious need of reliable, affordable sources of pork. As you know, China is a key export market for U.S. pork producers. We hope the U.S. and China remain in productive dialogue." 

Pork producers have been looking forward to an uptick in Chinese purchases as COVID-19 continues to cause challenges here at home for the industry.  

Lately, China has been purchasing large amounts of U.S. pork.  

“For the first quarter, we are at 280,000 metric tons, which is 300% growth,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation. “The weekly data that we get for the months of April and May will indicate the numbers are still big but they’re starting to decline a bit which would make sense with reduced supply.” 

Before President Trump’s Friday press conference, some economists and industry experts had concerns about a stifled or broken relationship with China. 

“We are kind of concerned right now with what’s going on with China,” says Steve Meyer, an economist with Kerns & Associates. “All of the rhetoric going on back and forth, we are hearing real troubles in moving carcasses to China right now. We’ve rolled our export forecast back pretty substantially.” 

“We’ve been exporting a lot to China,” says Nick Giordano, Vice President and Counsel, Global Government Affairs for the National Pork Producers Council. “Of course, nobody really knows whatthe future holds in terms of U.S. [and] China relations.”

Despite the current purchases, Giordano, says exports to the country could be better.

“Importers in China have to pay more for U.S. pork,” he explains. “[They] have to pay a duty that’s higher on U.S. pork than they do with pork from other nations. [It’s actually] 25% higher. That’s [still] because of the steel and aluminum tariffs the U.S. has on China.” 

China isn’t just purchasing from the United States. 

“The No. 1 supplier on pork [for China] is Europe, the European Union as a whole,” Halstrom says.

U.S. pork exports are on a record pace for the first quarter – up 40% year-over-year, he adds. While China is still big, Japan and Mexico are also major markets. New export numbers will be released Friday. 

“We will see an impact in April and May, and it will be a slow-down in growth,” Halstrom says. “I still think there’s growth but not as rapid of a pace.” 

Meanwhile, U.S. producers are still having trouble getting hogs to market and the price forecast is uncertain.

 “The weighted average is in the high 60s right now,” Meyer says. “We think the national net weighted average, which we think is representative with all of the hogs, is probably going to stay in that range.” 

However, it depends if the foodservice industry can buy pork at the same pace its being processed in the next six to eight weeks.

He believes fourth quarter 2020 will bring stronger prices – as the entire industry searches for tensions to lessen.

   

 

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