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Speculation Swirls Over Potential Opportunities for US Meat Industry in Wake of African Swine Fever

Most livestock market economists that follow the beef cattle industry say it is also important to follow what is going on in China with African Swine Fever. That includes Dr. Glynn Tonsor of Kansas State University who says that things are definitely very serious with this disease and it is very likely that before it is all said and done with - it will have market implications for beef producers as well.

Tonsor cites a recent report from Rabobank which suggests that losses to China’s hog production after this epidemic could reach up to one-third of its herd. To put that into perspective and what that means in the potential opportunities for exportation to China, Tonsor says if that projection is realized, that would actually be 30 percent greater than all the pork the US is expected to produce in 2019. Since the onset of ASF, Tonsor says the volatility in lean hog markets has been astounding and adds that the speculation continues to evolve.

“More and more market participants are questioning if lean hogs will trade at the same level as live cattle this summer,” he said. “I’m not going to say it’s going to happen, but you could have a perfect storm that enables that in the even we keep having upward movement in hog prices.”

In addition, according to another report, US pork exports were over 77,000 mt., easily a weekly volume record, Tonsor says wondering just how long those large numbers might be sustained. This pace of activity in the market comes at a very advantageous time as meat production and supplies in the US continue to grow. Tonsor concludes that if the US is able to export more than previously thought possible - in pork, beef and poultry - then that would help accomplish a couple things in the market.

“One is it would raise the value of those animals beyond what we expected,” Tonsor said. “But it would also reduce some downside pressure here in the US given the growing supplies here in the states.”

Tonsor adds that any potential opportunity to capitalize on this situation hinges on the US’s ability to export to China and other affected nations. This will of course, he says, be dictate by the past efforts made to gain and maintain US access in these markets - the reality of which he says has started to underscore the importance of paying attention to that longer term view that he insists are necessary for making these investments in foreign trade relations.

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