November 25, 2019 / 6:13 PM / 18 days ago

Going whole hog: U.S. tells exporters to report pig carcass sales as China buying soars

CHICAGO, Nov 25 (Reuters) - The U.S. Department of Agriculture said on Monday that commodity exporters must disclose sales of hog carcasses, giving officials and traders more insight into a surge of Chinese pork buying that has roiled global meat markets.

China’s pork imports have nearly doubled this year as a fatal pig disease has decimated its herd and pushed prices of the country’s favorite meat to record highs. Its imports of beef and chicken have also climbed as China is scouring the world for meat to replace millions of pigs killed by African swine fever.

The USDA published a rule to specify that exporters must report sales of pork and beef carcasses effective immediately, after its Foreign Agricultural Service received informal inquiries about what must be disclosed.

Previously, exporters had to report sales of “muscle cuts.” Traders and analysts said it was unclear whether that included different types of carcasses.

China, the world’s largest pork consumer, is buying U.S. hog carcasses from companies like WH Group Ltd’s Smithfield Foods because Chinese meat processors need the entire animal, according to analysts.

“Timely reporting and publishing of agricultural export sales data is key to effectively functioning markets,” the USDA said in a statement.

The USDA publishes commodity export sales data each week that can swing agricultural futures prices.

The agency’s data had previously been incomplete because it was unclear whether shippers had to alert the USDA to carcass sales, said Dennis Smith, commodity broker for Archer Financial Services in Chicago.

Now, exporters know they must report sales of whole carcasses, carcasses that are divided, and those that are boxed.

“The rule is pretty clear now,” Smith said.

“It’ll give us a better perspective on the carnage in China - how much pork they actually need. It’ll give clarification on actual exports that are headed for the country.”

U.S. carcass shipments to China began in June after Smithfield Foods, the world’s biggest pork processor, retooled a processing plant in Virginia to slice hogs in thirds for export to China in boxes. Shipments reached a total of 78,390 tonnes by the end of September, according to USDA data, topping 676 tonnes shipped in 2017.

Smithfield did not immediately respond to a request for comment.

U.S. processors face a disadvantage for sales to China, compared with other suppliers, because Beijing imposed steep tariffs on U.S. pork as part of the countries’ trade war. Still, Chinese prices are so high that importers are willing to pay the tariff, affecting the U.S. market. (Reporting by Tom Polansek in Chicago Editing by Matthew Lewis)

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