An increase of 25% tariff on imports of pork from the United States will not impact China's hog market

By CnAgri2018-03-30 14:25:12 Print The Ministry of Commerce plans to impose tariffs (25%) on some American products including agricultural products such as pork and pork products, and issued a list of products on March 23, 2018. Affected by this, the shares of various listed large-scale animal husbandry enterprises went up all the way in that day. The shares of New Wellful Co., Ltd. and Aonong Biological Technology Co., Ltd. hit limit up, and Wens, Truein, TRS and other companies also saw growths to varying degrees.
 
Then, if China really increases tariff on the imports of pork originating the US, can it boost hog prices in domestic? BOABC believes that the boost effect is not great.
In terms of pork imports, in 2017, China imported 1.22 million tons of pork, accounting for only 2.28% of domestic pork production which was 53.4 million tons. China's pork consumption mainly depends on self-sufficiency.
From the perspective of source countries of imported pork: In recent years, China has gradually lifted the ban on pork imports, and the channels have increased gradually. In 2017, the number of source countries of China’s imported pork in 2017 has increased from 12 in 2011 to 17 in 2017, and the United States has receded to the forth from the original first country. In 2017, 165,700 tons of pork originating the US was imported, accounting for 13.62% of China’s total imports.
As for the price difference of pork between China and the US: in the peak period of pork price in domestic in 2016, the spread between China and the US reached 10 yuan/kg, resulting in an increase in import volume; and from current situation, domestic pork price is at a low level, and the price difference between China and the United States is less than 2 yuan/kg, so the pork of the US hasn’t the price advantage in 2016.
We believe that the supply of hogs is sufficient in the fundamentals, and an increase of 25% tariff on imported American pork will have no impact on China's overall hog market.
However, it is worth noting that if the trade war continues, and soybeans are imposed higher tariff, the production costs of hogs in domestic will rise, which will affect the profits and prices of hogs and bring immeasurable loss to domestic hog market.