By Jonathan Martin
U.S. lean hog futures dove by the three-cent daily trading limit yesterday in response to President Donald Trump’s threats to impose additional tariffs on China and continued concern about the spread of African swine fever (ASF).
The plunge came after a period of mostly higher prices, where traders expected U.S. pork to start filling the gap left by China’s ASF outbreak. Rabobank, the Dutch global ag financing agent, estimates that between 150 and 200 million hogs have been infected and will be lost. That’s more than the total 2018 production in the U.S.
The futures dropped sharply when Trump’s threats made the prospect of a U.S. swine influx into China less likely.
“The (commodities with) 10 percent (tariffs) will go up to 25 percent on Friday,” Trump tweeted May 5 from his personal account. “USD$325 billion (in) additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25 percent.”
CME June lean hogs ended the day down three cents at 89.750 cents per pound, while July futures were also down three cents at 92.675 cents.
Meanwhile, the threat of ASF showing up in U.S. hog herds continues to hang over the domestic industry.
“The rate in which it has spread over the course of the last 12 months makes it very plausible that it could come to the United States,” Noel White, CEO of U.S. meat processor Tyson Foods told Reuters May 6.
In a May 6 report outlining Tyson’s quarterly results, White described his views on the effect ASF could have on industry.
“African Swine Fever has the potential to impact the global protein industry on a level that we have never experienced,” he said in the report. “Our forecasts for the current fiscal year do not include any potential effects from ASF as we do not have clarity on when the impact might occur or what the magnitude could be.”