Markets
14/11/2018

Trade War Lowers Pork, Beef Prices In US, Chicken Industry To Be Hit




A reduction in exports of pork to China and Mexico because of the trade wars by President Donald Trump has forced US consumers to change taste and opt for cheaper pork compared to chicken. The lowered exports of pork products have also brought down its price in the US.
 
Supplies of pork and beef in the US have also been increased by an increase in the number of U.S. hogs and cattle which has brought in a change in diet habits of people. Hamburgers instead of chicken are being promoted by restaurants while pork is being featured by grocers because of the increase in supply.
 
Analysts expect that this change in supply and taste would result in an end to continued profits for the last 27 quarters, Bill Roenigk, an agricultural economist and consultant for the National Chicken Council trade group said that it would impact companies like Tyson Foods Inc, and Sanderson Farms Inc. In the fourth quarter of 2018, there is a chance for the chicken sector to lose money or break even.
 
The trade war with China has also seen lesser shipments of U.S. soybeans and sorghum to China.
 
“With all that pork on the market,” Roenigk said, “it has spilled over to affecting consumers’ demand for chicken.”
 
U.S. pork exports to China and Mexico have come down because of a 62 per cent retaliatory tariff on the produce by Chinese authorities and a 20 per cent additional tariff by Mexico.
 
after pork belly prices declined, prices for bacon have been reduced by Kraft Heinz Co, owner of the Oscar Mayer brand.
 
Jarrod Sutton, a vice president for the National Pork Board, a trade group said that deals and marketing campaigns for pork have been launched by Ahold Delhaize’s Food Lion and Stop & Shop grocery stores.
 
Food Lion said it offers promotions based on product availability.
 
According to the predictions by the U.S. Department of Agriculture, there would be a growth of 1.2 per cent in per capita chicken consumption in the country compared to a growth of 4.3 per cent for pork and 2.6 per cent for beef.
 
According to the National Cattlemen’s Beef Association, an industry group, pork and beef demand is being increased by promotions at restaurants. For example a promotional campaign such as one at Wendy’s Co, where a “S’Awesome” hamburger with three strips of bacon is featured, is gaining popularity.
 
It generally does not adjust marketing based on short-term changes in commodity prices, Wendy’s said.
 
For the meat companies, this drop in the chicken consumption is being viewed as a turnaround. 
 
After struggling to keep up with chicken demand last year, Tyson is building a $300 million plant to process 1.25 million more birds a week. it profit forecast for 2018 was cut by the company in July because of uncertainty in trade policies.
 
(Source:www.reuters.com)

Christopher J. Mitchell
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