US Pork and Poultry on the Negotiating Table

Published on: 13:48PM Apr 17, 2019

U.S. Pork and Poultry On The U.S./Chinese Negotiating Table

  • While the details are thin, it is likely that China would likely lift a ban on U.S. poultry and may buy more pork to meet a growing supply deficit resulting from African swine fever (ASF).  
  • A key hurdle will be if the U.S. and China can negotiate to lift the current ban on pork that has traces of ractopamine.  While the U.S., Japan and South Korea have scientifically proven that animals treated with ractopamine to be safe for human consumption, China has banned meat with ractopamine since 2015.  
  • Chinese authorities blocked the use of ractopamine since 2002.
  • Beijing has banned all U.S. poultry and eggs since January 2015 due to an avian influenza outbreak.
  • As part of the negotiations, it seems highly probable that China will want to export poultry to the U.S.   
  • What It Means For The U.S. Farmer: At FBN, we believe that any negotiations to increase the volume of U.S. protein can be positive for the farm economy.  Simply put, greater export demand = increased animal supplies = greater demand for feed inputs like corn, soybean meal and DDGs.                                                               

Russian and German Wheat Crops Showing Strong YoY Growth

  • This week both estimates for the 2019/20 German and Russian wheat crops have been increased.  
  • According to DRV, an association of German co-ops, Germany's 2019 wheat harvest is estimated to increase by 20.6% YoY to 24.44 MMT as the crop recovers from a drought in 2018.  
  • Germany's 2019 winter rapeseed crop will fall 11.6% YoY to 3.24 MMT on reduced sowings.
  • SovEcon has raised its forecast for the country's 2019 wheat crop in 2019 to 83.4 MMT from 80 MMT as a majority of the crops are in good condition.  The estimated production increase would add 12 MMT of wheat production but is just shy of the record 85.1 MMT production in 2017.
  • SovEcon also raises its overall grain forecast to 129.1 million tonnes from 126.1 million tonnes.
  • What It Means For The U.S. Farmer: We believe that increases in global wheat production can be a negative for the U.S farmer.  While larger yields normally signal lower protein wheat, the global wheat export regime continues to make U.S. wheat the supplier of last resort.  Add to this a strong US dollar; at FBN we believe there is no rush to own future U.S. wheat demand. Cash market protein spreads could become more important so please contact your FBN representative with any questions.                                          

 

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