Chart Of The Week: Hog Havoc

Chart Of The Week: Hog Havoc

over 4 years ago2 mins

This week’s chart of the week looks at the price of US “lean hogs” – pigs, to you and me – over the course of 2019. It’s been a hog wild ride for Porky, Peppa and their friends…

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What does this mean?

Never let it be said pigs can’t fly: prices started to soar in the spring, as a deadly African swine fever swept its way through China. The disease wiped out 100 million of them – a third of China’s entire pig-ulation. And given that the People’s Republic is home to half the world’s swine, American farmers prepared themselves to up their exports and meet Chinese demand…

But those hopes were cut snort – short, sorry – when trade tensions took hold in May. The US announced it’d boost tariffs on Chinese goods, and pig prices fell in expectation of retaliatory tariffs from China. Those worries became even more pronounced in August, when China threatened to stop US agricultural imports altogether. That didn’t end up happening, but tariffs on US pigs are currently still an anything-but-lean 72%.

Why should I care?

In China, the swine fever and trade war meal deal has created a full-blown crisis. Pork prices are 47% higher than a year ago, and shortages across the country have led the government to stop hogging its frozen reserves. State-owned newspapers are even advising people to eat less pork in an effort to dampen demand. It’s a perfect example of the impact of trade wars: they can boost inflation by reducing imports and driving up prices, making everyone poorer. Americans are in the same, er, mud: the prices of tariff-affected goods have soared there too.

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Fortunately, an end may be in sight: China recently waived tariffs on some US pork imports. That sent the price of US hogs higher, with traders hoping a deal will be agreed. That’d be good news for US meat companies like Tyson Foods, but even then they’re not guaranteed to bring home the bacon: some US pork is permanently banned in China because it includes the chemical ractopamine. That means suppliers who don’t use the additive – like Chinese-owned Smithfield Foods – will have the trough all to themselves.

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