March 14, 2019 / 6:00 PM / 7 days ago

China makes major U.S. pork purchase despite steep import tariffs, as hog virus takes toll

CHICAGO (Reuters) - China made its biggest purchases of U.S. pork in nearly two years last week, U.S. Department of Agriculture data showed on Thursday, as Chinese hog prices surged after an outbreak of a deadly swine disease.

FILE PHOTO: Workers cut pork at Park Packing -- one of the Chicago's few remaining slaughterhouses -- in Chicago, Illinois July 18, 2015. REUTERS/Karl Plume

Buyers in the world’s biggest hog producer and pork consumer struck deals for the meat despite import tariffs of 62 percent imposed by China on U.S. pork as a consequence of the trade war between the two countries.

The duties had slashed China’s imports of U.S. pork from companies such as WH Group Ltd’s Smithfield Foods since last summer.

The sale of 23,846 tonnes of U.S pork in the week ended March 7 comes after a months-long outbreak of African swine fever in China that has spread to 111 confirmed cases in 28 provinces and regions across the country since August 2018.

There is no cure and no vaccine for the disease, which does not affect humans but is highly contagious and fatal to pigs. About 1 million pigs have been reportedly culled so far in an effort to try to contain the disease.

“They are going to need pork and lots of it,” Dennis Smith, a commodity broker for Archer Financial Services in Chicago, said about China.

The sales were the biggest to China since April 2017 and the third largest since the USDA began tracking pork export sales in 2013.

The USDA did not immediately respond to a request for comment about pork sales to China. Officials have previously said China may be underreporting hog deaths from African swine fever.

China also recently resumed purchases of other U.S. farm products, including soybeans and sorghum, that face retaliatory import tariffs.

U.S. President Donald Trump said on Thursday the United States was doing well in trade talks with China, but that he could not say whether a final deal would be reached.

Bob Brown, an independent U.S. livestock analyst, said U.S. pork prices have declined enough to offset Beijing’s tariffs.

“If they needed the stuff, we were the cheapest by far,” he said.

Chicago Mercantile Exchange May hog futures fell to a contract low last month. On Thursday, the contract reached its highest price in more than two months, supported by increasing concerns about African swine fever in China.

Chinese hog prices reached their highest in 14 months on Monday.

“Certainly there’s been a lot of focus on what hog prices are doing in China,” said Altin Kalo, agricultural economist for New Hampshire-based Steiner Consulting.

Reporting by Tom Polansek; Editing by Steve Orlofsky

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