Getting U.S. pork in gold medal contention

The 2016 Olympics are well under way, and the medal count is adding up for U.S. athletes, and world and Olympic records are falling in the process.

Between now and Aug. 21, the final day of competition in Rio, I’m sure we will see many more spectacular performances, and quite possibly more records being set.

Though I enjoy watching the Olympics for the competition and the events themselves, I equally enjoy hearing the side stories that tell of the obstacles athletes have had to overcome to get to the Games in the first place. For some, simply making it to the Olympics is medal-worthy in its own right.

Keeping in the Olympic spirit, I asked the market analysts who contribute columns to the National Hog Farmer’s “Weekly Preview” newsletters for who they each saw as the top five countries that are imperative to the export success of the U.S. pork industry.

As most of them have written recently, the China-Hong Kong market is a growing opportunity to get the U.S. pork export market into gold medal contention. As Joseph Kerns, Kerns and Associates, wrote “no one is even close” to the importance of the China market.

Steve Meyer, EMI Analytics, reminds that China-Hong Kong wasn’t even in the discussion last year, but is currently in the No. 3 spot, and “is clearly the most important market for future developments.”

Chip Whalen of Commodity & Ingredient Hedging LLC and Dennis Smith of Archer Financial Services lined up Mexico, Canada, Japan and South Korea, in addition to China. Meyer says Korea, Australia and Colombia markets are growing quickly due to recent free-trade agreements, and he believes that these three may become more dependable markets than China-Hong Kong.

Smith wrote in his last column, “When dealing with record large production, rising exports are critical in keeping hog prices above the cost of production. … Exports during January to May to our largest customer, Mexico, were down 4.6%. Exports to Japan, our second largest customer have been down 4.9%. However, exports to China/Hong Kong, our third largest foreign customer, have been up by 137%. Record high pork prices in China should keep their import needs high. We are in competition with Europe pork producers and Brazilian pork producers to meet the expanding demand from Asia.”

That 137% growth to China backs up Meyer’s assessment of the future importance of the Chinese market.

Kerns’ list of world pork markets to keep an eye on strays from what the others offered by putting Russia in the No. 2 spot of markets to watch: “If they (Russia) continue to boycott the European Union and the United States, we are going to struggle this fall with or without China.”

Of course, just like athletes preparing themselves for competition, the U.S. pork industry needs to take care of things at home before they can even hope to compete globally, or at least stay in the game.

Kerns wrote that the U.S. swine industry’s “commitment to three new big plants and two smaller iterations is a testament to our dedication to supplying more product on an annualized basis.”

A lot of market analysts have pointed to the passage of the Trans-Pacific Partnership as being integral to the success of U.S. pork in the global market. Its passage, though favored by livestock groups, gets a chilly reception from both of this year’s main-party presidential candidates. President Obama supports TPP, but the chances of it getting passed in a lame-duck session is about as likely as the Refugee Olympic team leaving Brazil with the most medals.

Meyer wrote, “TPP would be a game changer for export volumes to Japan as the low-value product sectors would be available to U.S. suppliers for the first time. … If TPP gets passed.” That’s a big “IF.”

Kerns, getting caught up in the Olympic spirit, says “U.S. producers responding with increased production with an attitude of taking on all comers with our collective financial strength and abundance of grain will demonstrate our global commitment. Go Team USA.”

TAGS: Marketing
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