* Chinese domestic pork prices at lowest in four years
* Demand for imports already weaker on low local prices
* Tariffs could spur Chinese demand for European pork
(New throughout, adds stock and futures price moves, comments
from U.S. trade groups)
By Dominique Patton and Tom Polansek
BEIJING/CHICAGO, March 23 (Reuters) - China's threat of
steep tariffs on American pork imports knocked down U.S. hog
futures prices and shares of producers on Friday, while
increasing fears of hard times for farmers already facing weaker
demand from the world's top buyer of the meat.
U.S. farmers have worried for months that rising trade
tensions would hurt exports of soybeans and other agricultural
products. China imported $19.6 billion in U.S. farm goods last
year, with soybeans accounting for $12.4 billion.
Without giving a time frame, China's commerce ministry said
the government was considering a 25 percent tariff on U.S. pork,
along with other duties. It did not announce potential tariffs
China is a key market for U.S. pork because importers buy
parts of the pig, such as feet, elbows and innards, that command
little value in most countries. Last year, American farmers
exported $1.1 billion of pork products to China and Hong Kong,
making it the No. 3 market by value.
Additional tariffs threaten suppliers such as Smithfield
Foods, owned by China's WH Group, and JBS SA
. WH Group shares dropped 4.7 percent, while JBS
shares lost 1.9 percent.
U.S. lean hog futures slid to their lowest since
"We sell a lot of pork to China, so higher tariffs on our
exports going there will harm our producers and undermine the
rural economy,” said Jim Heimerl, a pork farmer in Ohio and
president of the National Pork Producers Council.
Tariffs, along with a brewing trade war between China and
the United States, could increase China's demand for pork from
countries such as Germany and Denmark, importers said.
China also will likely rely more on domestic supplies,
following the expansion of large-scale pig farms. Pork prices
there are hovering around a four-year low of 10 yuan ($1.58) per
kg, squeezing demand for imports.
"Even without the tariffs, with such low prices, we will use
more domestic pork for our Chinese business," said Luis Chein, a
company director at WH Group, China's top pork producer and its
biggest importer of U.S. pork.
WH Group's Smithfield and rival U.S. producers have remade
the nation's hog industry to serve China by shunning a growth
drug called ractopamine, which Beijing bans. However, exporters
still face competition from Canada, which has moved away from
the drug more quickly, and other suppliers.
"China is a price-sensitive market," said Dan Halstrom,
chief of the U.S. Meat Export Federation. "Any tariff rate
increase would affect the competitive position of U.S. pork."
(Reporting by Dominique Patton in Beijing and Tom Polansek in
Chicago; additional reporting by Beijing Newsroom; editing by
Tony Munroe, Tom Hogue and David Gregorio)
First Published: 2018-03-23 12:55:33
Updated 2018-03-23 20:21:46
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