While grain and hog markets have reacted negatively to the threat of tariffs, the same can’t be said about cattle.
U.S. pork producers export well over a quarter of their product annually and are just coming off a record year of exports totaling $8.6 billion to 100 countries.
So retaliatory tariffs from any of the U.S.’s top export customers are a huge concern.
On March 12, China imposed 10% retaliatory tariffs on U.S. pork, on top of the previous 25% duties.
China’s one of the top five markets for exports but tariff tensions are also brewing with other leading buyers, including Mexico which the industry is hoping to head off.
Maria Zieba, vice president of government affairs, National Pork Producers Council, says,
“Well, we are working really hard to not only meet with the U.S. government officials at USDA and at the U.S. Trade Representatives, which are responsible for this. But we have an active line into key members of Congress and those committees on the importance of trade and market access for U.S. producers.”
The EU has also imposed 25% tariffs on U.S. pork but it’s not a big market.
Meanwhile, NPPC is negotiating to avoid retaliatory tariffs with any other customers.
Zieba says, “And so we’re working with the Mexicans, Canadians, Japanese South Koreans to to ensure that we don’t end up on those retaliatory lists for us pork products.”
China and the EU have placed the same level of tariffs on U.S. beef exports but the beef industry in not as export reliant as the pork sector.
Tariffs on U.S. beef and cattle imports have a net effect of tightening supplies and that’s price positive.
Alan Brugler, A&N Economics, LLC. of Omaha, Nebraska, says, “If we’ve got tariffs on beef imports and imports are almost as big as our beef exports, if we’re not importing all that beef, most of which goes to ground beef, where’s your 50 production coming from, you’re going to have to grind up some higher value cuts, which will tend to prop up your box beef prices. So I think that’s part of the support factor in cattle here too.”
Possible tariffs on Canada and even Mexico would likely slow sales from these top two beef importers.
Mark Knight, Farmers Keeper Financial, says “We import, call it ballpark, about 10%, and those come from Canada, Mexico, and Brazil. So, where we’re getting the negative tariff news on the grain markets, it’s actually a positive for U.S. cattle if we kind of limit our cattle supply and and make those more expensive.”
And nearly all U.S. cattle imports originate from Canada and Mexico.
Total cattle imports from Canada are at 800,000 head annually, and Mexico’s feeder cattle imports alone stand at 1.2 million a year.
Knight says, “Snd so that market obviously we have a lower lower herd numbers that have have really led to this but the tariffs have have just increased that tenfold.”
As a result, feeder cattle futures continue to make all-time highs.
