ASF, Tariffs Make China A Double-Edged Sword

USFR 09/14/19 - RT1
Hogs ( Jo Windmann )

Farmers are keeping a close eye on not only the USDA World Agricultural Supply and Demand Estimates and Crop Production reports, but export trades being made in real-time, too. This week, China announced it would buy some U.S. goods previously unaccounted for, and African Swine Fever (ASF) has traders eyeing what that could mean for the U.S. pork market.

This week, USDA reduced corn and soybean yields but boosted corn ending stocks.

“USDA is going to take an incremental approach here,” said Chad Hart, Iowa State University associate professor of economics to U.S. Farm Report Host, Tyne Morgan. “So, we saw some adjustment here in September. We'll see more in October and even more in November.”

It’s still early for much of the crop, so there are a few factors yet to be determined.

“There are still unmeasurables with this crop,” said Chip Flory, AgriTalk Host and Farm Journal Economist. “Part of that being how much does the grain weigh? We've got an idea that there are fewer ears out there than what there were a year ago. We just don't have a good idea of what the ears weigh yet.”

Hart said the bigger factor that should concern farmers from the reports this week is the ending stocks, as export numbers continue to slide.

“For soybeans, it’s all about China,” Hart said. “But for corn [the market is] the rest of the world, and we’ve seen significant cuts in a lot of our smaller markets. That’s really troublesome as we’re looking over the next year.”

Watch more analysis from the College Roadshow here.

Don’t expect China officials to knock on U.S. farmers’ doors for corn, either—they’re looking for higher protein sources to feed what hogs they have left.

ASF in China could be a bright spot for U.S. hog producers.

“They've admitted it's [ASF] an epidemic there,” said Lee Schulz, Iowa State University associate professor of economics. “We've seen exports really start to rally there both in what's been shipped there as well as what's on the books for the remainder of 2019. So, I think we're really starting to see the momentum in place for the pork market to react to the rather positive demand fundamentals out there.”

However, Schulz says China views the U.S. as a ‘last resort’ market and is sourcing more of it pork from the European Union (EU) and others. Still, U.S. trade has taken advantage of the situation by backfilling where EU used to supply hogs.

 

Read more analysis from this week’s report about pork and soybean shipments to China:

September USDA Reports Show U.S. Crop Trending Down

‘Let U.S. Pork Producers Help Chinese People,’ NPPC Says

China To Suspend Tariff Hikes On Pork And Soybeans

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