Which Is The Bigger Threat For Pork, Beef: NAFTA Or Chinese Tariffs?

3/31/18 Roundtable 2

China’s announcement of a 25 percent tariff on pork products last week caused producers in the industry to worryas China is the number two value market for U.S. pork. 

This week, the trade friction with the U.S. and China has increased quickly, with China firing back with a new round of proposed tariffs totaling $50 billion and targeting 106 products.

“Things are looking quite a bit darker than what they were four to six weeks ago in this market, and we’re taking a lot of the profit margin out for many guys that’s gone negative,” said Chip Flory, host of AgriTalk and AgriTalk After The Bell and Farm Journal economist. “We can’t take another blow.”

For now, these are proposed tariffs. Both the U.S. and China have expressed interest of negotiating as tensions continue to escalate into what some are calling the makings of a trade war.  

As far as the technical picture, Jim McCormick, senior broker and market commentator for Allendale, Inc.,says it’s improving. Fundamentally, he says the hog markets are more concerned with NAFTA and those renegotiations.

“It looks like the Trump administration is not taking quite the hard line stance that we were all fearful that they would take four, six, eight weeks ago,” said McCormick on U.S. Farm Report. “We can get a deal done with NAFTA, and that will relieve a lot of what ifs and you’ll allow some of the money to come back into the market.”

If the pork aspect of the two-decades-old North American Free Trade Agreement doesn’t see any changes, Flory calls that a win.

“Do no damage is the primary thing,” he said. “All we need is word that agriculture is going to survive without any damage in the NAFTA agreement.”

Hear their thoughts on the cattle market and the decline in feeder and live cattle prices on U.S. Farm Report above.