China is by far the world’s largest producer and consumer of pork, so its pork import volumes often depend heavily on domestic market conditions. When its hog prices are high and domestic pork supplies are tight, China tends to become a more attractive target for exports from the United States and other major pork-exporting countries. But as U.S. Meat Export Federation Economist Erin Borror explains, the recent surge in U.S. pork exports to China runs counter to conventional thinking.
China’s hog prices have been in decline since December, and for the past two months have been lower than U.S. prices – a rare price inversion not seen since 2010. Yet March exports of U.S. pork/pork variety meat to the China/Hong Kong region were the largest in more than a year – increasing by 49 percent in volume (to 41,295 metric tons) and 59 percent in value (to $93.6 million) over March 2013.
Considering the long period of time that has passed since China’s hog producers enjoyed profitable conditions, it is likely that supplies will begin to subside and prices will improve – which would suggest an even better business climate for U.S. exports. But Borror says opinions vary on when this will happen – with some analysts expecting to see changes in market conditions very soon, while others feel China must first undergo significant sow liquidation.