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Rabobank Says Pork Exports Rely on Two Key Factors | KTIC Radio

Rabobank Says Pork Exports Rely on Two Key Factors

The headwinds for exports of pork from the US are twofold: Mexico and ractopamine. Mexico is the largest customer for US pork on a volume basis – accounting for about one-third of total exports and by some estimates, one-in-five of all hams produced domestically.

•Mexico has been a strong market for US pork, with growth of 10 per cent per annum in the last four years

•Perennial outbreaks of porcine epidemic diarrhea virus (PEDv) have stunted Mexico’s productivity

•Mexican pork producers have experienced very strong margins in light of the favorable prices

Rabobank estimates the domestic breeding herd has expanded by nearly 15 percent over the last two years, lifting domestic pork production and pressuring imports, assuming disease outbreaks are controlled.

The issue of the feed additive ractopamine has been a key barrier keeping US pork from fully participating in the fastest growing pork import market – China – due to China banning the use of ractopamine. With the EU pork industry being fully ractopamine-free and the decline in the value of the Euro, pork exports from Europe to China have doubled in the last three years, and Monday, the EU controls more than three-quarters of all pork exported to China, said Rabobank.

As more US pork producers adopt a ractopamine-free supply chain, exports to China are starting to climb. However, Rabobank still sees a number of missed trade opportunities in this very important market.

•Rabobank expects an increase in US hog supplies in 2017 and 2018 to help utilize new processing capacity from the US Midwest and from increased Canadian hog imports

•With grain prices at multi-year lows, there is a sufficient level of demand from crop growers to diversify into hog-finishing capacity

•Supplementing the growth in the domestic hog herd, Rabobank expects an increase in the flow of feeder pigs from Canada, driven by the decline in the value of the Canadian dollar

•The end of the US policy of Country of Origin Labeling (COOL) and strong demand for hogs from US packers in 2017 and 2018 as new processing plant capacity comes online will also add to the increase in hog supplies.

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