Farmscape for May 31, 2018
H@ms marketing Services says the Chinese trade retaliation directed at the United States that has harmed the U.S. pork sector is also hurting Canadian pork producers.
Since the beginning of March, when speculation about Chinese retaliation against U.S. pork began, hog futures have dropped dramatically.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services says a developing protectionist attitude from the United States, largely from the office of the President, is inhibiting normal trade channels on all commodities but especially pork.
Clip-Tyler Fulton-h@ms Marketing Services:
Over the course of the last two months we've seen the dispute escalate to a point where there's really a very limited amount of U.S. pork that's being shipped into China and that's quite concerning.
China was number four or five in terms of the size of the destination of that market for U.S. pork and it plays a really significant role in the whole market, especially with their consumption of some of the non-muscle cuts.
When you effectively eliminate the fourth largest market for U.S. pork over the course of two months, it has a possibly measurable effect on cash values, in particular on cuts that are most supported by Chinese demand.
To put a dollar figure on it, it's difficult to say but I would estimate that maybe we've looked at two to three percent lower prices and then, to some degree, this uncertainty of really lack of any plausible solution to the issue is also probably impacting the market as well.
Fulton acknowledges the impact on the U.S. transfers directly to Canada.
He says when the U.S. packers have fewer places to sell their pork, it's reflected in what they're willing to pay and, because the value of Canadian hogs is a function of the U.S. market, Canadian producers are also feeling the pinch.
For Farmscape.Ca, I'm Bruce Cochrane.
*Farmscape is a presentation of Sask Pork and Manitoba Pork