China buys U.S. pork despite trade tariffs as hog disease spreads

Seaboard

29/11/2018 20:09

By Tom Polansek and Michael Hirtzer
    CHICAGO, Nov 29 (Reuters) - China is loading up on U.S.
pork, despite import tariffs imposed due to the trade war, as a
highly contagious swine disease ravages the Chinese hog herd.
    The world's top hog producer and pork consumer last week
placed its largest order for American pork since the trade war
began, U.S. Department of Agriculture data showed on Thursday. 
    The purchases are a signal that an outbreak of African swine
fever is raising concerns of an eventual supply shortfall,
potentially superseding trade tensions between the world's two
largest economies, brokers and traders said.
    "It's kind of like, why do you buy from your enemy? Because
you have to," said Don Roose, president of Iowa-based broker
U.S. Commodities.
    China has imposed retaliatory tariffs on imports of U.S.
farm products in the tit-for-tat trade row, including duties of
62 percent on American pork.
    U.S. President Donald Trump and Chinese President Xi Jinping
are scheduled to meet on Saturday at the G20 summit in Buenos
Aires to discuss trade amid increasing tensions.  urn:newsml:reuters.com:*:nL4N1Y432H
    China in the week ended Nov. 22 bought 3,348 tonnes of pork
to be shipped this year, USDA said, its largest purchase for the
current season since February.
    China also bought 9,384 tonnes of pork for shipment next
year, accounting for 72 percent of the total weekly sales to all
countries.
    Combined, they were the biggest weekly sales to China since
April 2017, sending U.S. hog futures  LHG9  up more than 4
percent.
    The deals come as China may buy pork for its state reserves
to support farmers struggling to sell pigs during the African
swine fever epidemic.  urn:newsml:reuters.com:*:nL4N1Y4255
    "Pork is abundantly supplied right now in China; prices are
low. That doesn't mean there will be plenty of pork in China
next year," said Brett Stuart, president of U.S. advisory Global
AgriTrends. 
    The sales could benefit pork exporters such as WH Group
Ltd's  0288.HK  Smithfield Foods and Seaboard Corp  SEB.A .
    Smithfield Chief Executive Ken Sullivan said in October that
African swine fever could roil global pork markets.  urn:newsml:reuters.com:*:nL2N1X60VL
    China has suffered more than 70 outbreaks of the disease,
which kills pigs and has no cure or vaccine.
    Chinese pig farmers have started to get rid of animals to
cut their losses after prices dropped when Beijing banned the
transport of live pigs from infected regions.
    "Basically every hog that's culled or killed to try to
control this disease is a hog that has to be imported," said
Dennis Smith, a broker for Archer Financial Services in Chicago.
    

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 (Reporting by Tom Polansek and Michael Hirtzer in Chicago
Editing by Nick Zieminski)
 ((Thomas.Polansek@thomsonreuters.com; +1-312-408-8556; Twitter:
@tpolansek; Reuters Messaging:
thomas.polansek.thomsonreuters.com@reuters.net))