China’s threat to interrupt American pork imports comes when hog producers don’t need another blow to their confidence.
“They’re a significant player, especially in the context of our market, which seems to be struggling to find new markets and find support,” said Tyler Fulton, head of risk management for Hams Marketing.
“It’s a signal of how tenuous that trading relationship is.”
The Chinese government an-nounced it wants to have independent verification that the U.S. pork it imports does not contain traces of ractopamine, which helps pigs convert feedgrains into muscle rather than fat.
Ractopamine is legal in the United States and Canada and is generally regarded as safe by world food safety experts.
However, a number of countries ban its domestic use or the import of meat that comes from animals that have consumed it.
Known as Paylean in the North American hog industry, the substance is fed to most commercial pigs but not those destined for the Chinese or other ractopamine-unfriendly markets.
Companies such as Smithfield in the U.S. and HyLife in Neepawa, Man., slaughter only ractopamine-free pigs for Chinese shipments.
The announcement that China wants independent verification of U.S. pork doesn’t just add a complication to the industry but also threatens to result in the rejection of shipments already bound for China.
However, the greater worry to the market is what it suggests about the growing Chinese demand for North American pork. Can that demand be counted on for the future if the Chinese government decides to block it?
“It makes us uneasy,” said Ron Plain of the University of Missouri.
China’s new position has not arisen out of problems or reported incidents of ractopamine-tainted pork.
Instead, many analysts are guessing that it is being driven by a desire to support the domestic Chinese hog production industry, which the government has been trying to ex-pand.
With fewer imports, domestic prices would rise.
“It seems like a political play to protect their own,” said Fulton.
China has been a success story for North America’s hog industry, consuming 12 percent of U.S. pork exports last year and a much higher percentage of offal. Plain said that is equivalent to 2.6 percent of total U.S. pork production.
Canada sold more than 100,000 tonnes of pork to China last year for $129 million.
It makes China only the fifth most valuable market for Canada, but Canada relies far more on exports than does the U.S. Sixty percent of Canadian production left the country last year.
Canada has previously had problems with China blocking imports because of ractopamine, but that doesn’t appear to be the situation now. The present situation appears to be between the U.S. and China.
However, analysts said that doesn’t alleviate the danger to prairie hog prices.
“It doesn’t matter, we’re so integrated,” said Fulton. “Our price is their price.”
Pork and hog prices did not take an immediate hit following the news about China, seeming to move little.
However, the news hit after a three-week price slide that has taken May Chicago lean hogs futures down to $89.50 per hundredweight from $96.50 per cwt. at the beginning of February.