Pig futures market raises sky-high expectations

The quotation on the American pig futures market, which is listed in Chicago (CME), has risen almost directly in recent weeks. For example, the price of the June contract rose by 25% in March to $0,95 per pound (0,45 kilo). That is the highest level in a long time.

Not only the pig futures market is showing a significant increase, because physical American pig prices are also clearly on the rise. For example, the Iowa/Minnesota price has increased in recent weeks by more than $0,35 to $1,36 per kilo (March 20), causing the price to deviate from the seasonal pattern. Although quotations almost always rise in the spring, this year the increase has started earlier than in other years. Moreover, the increase is much faster.

Swine fever and trade war
The reason for the revival is the dwindling number of pigs in China, which is caused by outbreaks of African swine fever in that country. The expectation is that the Chinese will import significantly more pork as a result, and European and American exporters, among others, will probably benefit significantly from this.

That China still applies a 25% import tax on American pork (as a result of the trade war) does not stand in the way of a revival. However, exports of American pork (including by-products) to China plummeted by almost 2018% to approximately 30 tons in 350.000, compared to 2017.

Constructive conversations
China and the US have been discussing it for some time apply of this trade war. Although it is reported that these conversations are constructive, there is no white smoke yet. Despite the competitive disadvantage with meat exporters in the European Union, the US believes it can benefit from the Chinese demand revival. This expectation also exists in Brazil and Canada, where pig prices are also increasing.