China imposes an additional 25% tariff on US soybean, which or will lead to about 3.5% increase in hog production costs.

By CnAgri2018-04-10 11:03:21 Print After the announcement of a 25% tariff on US pork since April 1, the State Council unveiled a list of products originating from the US, and has decided to impose additional tariffs of 25% on 106 items of products under 14 categories, including soybeans, automobiles, etc. If the tariffs are implemented, the growth in soybean prices will lead to about 3.5% increase in hog production costs.
 
From the perspective of feed ingredients, the costs of various concentrated feeds including soybean meal account for 44% of the production costs of hogs. If 25% ingredients of feed are soybean meal, the costs of soybean meal account for 11% of hog production costs. If the addition tariffs of 25% on US soybeans are implemented, the prices of international soybeans will end higher after initially falling. The decrease may maintain for a period, and then the prices may increase 250-300 cents/bushel from current 1004 cents/bushel. The growth in US soybeans prices will be 30-35%, which will lead to an increase of about 3.5% in hog production costs.
 
When soybean meal prices are too high, domestic feed enterprises or will control costs through adjustment of feed formula. At present, corn, highly processed products and amino acid are sufficient in domestic, which will substitute for protein ingredients to ensure basic supply if the prices of soybean meal increase. When the prices of soybean meal are excessively high, the prices of other protein ingredients also will rise. Feed industry can reduce the additive amount of soybean meal or its substitutes through the adjustment of formula or low protein daily ration technology (decrease space of about 15-20%).
 
If the trade war upgrades in days to come, our country officially imposes tariffs on US soybean, the prices of raw materials including soybean meal, corn, etc. sure will be driven up, and the increase in feed costs will be directly transferred to the growth in hog production costs. At present, pork consumption market is sluggish continuously, the trade war sure will lead to more serious losses to farmers.