Anticipation of future export gains for U.S. pork has pushed some of the 2012 hog futures contracts higher. The prospect of the House and Senate passing the three pending free-trade agreements—possibly this week-- is being factored into the market. The softening dollar has added to the positive export outlook as well.
China also stepped forward, with officials there saying they expect pork imports into the country to increase by 8 percent in 2012, for a total of 480,000 metric tons. That’s despite projected growth in China’s domestic pork production, according to USDA’s Beijing attaché.
Chinese authorities view affordable pork as "important for social stability," as pork prices have been the driver in pushing up China’s inflation. The country’s annual import bill tallies $1.5 billion, USDA notes.
USDA does estimate that the continuation of high pork prices and China’s government subsidies will increase the country’s pork output by 4 percent to 51.3 million metric tons. China’s total 2012 meat production is forecast to rise 3 percent to 81.4 million tons.
USDA projects China’s 2012 pork consumption to increase 4 percent to 51.5 million tons, up from 49.7 million tons this year and per capita demand to increase to 38 kilograms per person.
"Despite the expected recovery in pork production, China's pork imports will continue to rise due to strong pork demand and competitive pricing on imports," USDA reports.
As for the South Korea, Panama and Colombia FTA’s, expanded trade with those countries could absorb another 6 percent of the United States’ annual pork production. Exports are going to claim 22 percent to 25 percent of this year’s production.
"These (FTA) agreements create direct benefits for agriculture, which is one of the most trade-dependent industries in the U.S. today,” says Frank Lucas (R-Okla.) chairman of the House Agriculture Committee. “Overall, exports account for more than 25 percent of total U.S. agriculture sales. These agreements will boost sales by opening more than $2.5 billion in new market access.”
Helping finally build traction for Congress to pass the FTAs is the need to create U.S. jobs. "U.S. agricultural exports generate employment, income, and purchasing power on and off the farm. According to USDA, exports support approximately 1 million jobs in agriculture, trade, transportation, food processing, and other manufacturing sectors,” Lucas adds.