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Is it better to raise US pork tariffs? Chinese pig company is only happy for one day

2019/03/01 16:58
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In the context of the United States provoking trade frictions, the Chinese Ministry of Commerce recently released a list of suspended concessions for US imports and sought public comment, including pork and products, with a 25% tariff.

Is it better to raise US pork tariffs? China's pig company is only happy for a day... Daily economic news reporters noticed that, stimulated by good news, on March 23, the pork stocks in the A-share market rose against the market, among them, Xin Wufeng (0.00 +0.00%, diagnosis) Shares), Dakang Agriculture (2.49 -4.96%, consultation stocks) daily limit, leading Wen's shares (20.66 -0.24%, diagnostic stocks) intraday gains over 7%. However, as of the close of the afternoon of March 26, the A-share pork sector fell sharply, reversing the gains on Friday.

It is worth noting that in the past year, domestic pork prices have continued to decline, and once fell below the industry breeding cost line. Then, if China imposes tariffs on US pork imports, will it boost domestic pork prices? This industry believes that the impact is not great.

Trade war affects the stock price of the pork industry

On March 23, the Ministry of Commerce issued a list of suspension concessions for the US import of steel and aluminum products 232 measures and sought public opinions, and proposed to impose tariffs on some products imported from the United States. According to the draft for comments, the Chinese side plans to impose a 25% tariff on products including pork and products, and recycled aluminum.

According to the list, the pork and product items include a total of 7 categories of goods.

The new daily economic reporter noted that due to the warming of the trade war, Wanzhou International, the world's largest pork food company, fell more than 10% in intraday trading on Friday and closed down 4.65% to HK$9.03.

On the morning of the 26th, Wanzhou International continued to fall. It closed down 4.32% as of the afternoon and temporarily reported HK$8.64.

Wanzhou International is the parent company of Shuanghui Development (25.67 +1.38%, diagnostic stock), whose income is mainly from China and the US market. According to data from the first three quarters of last year, Wanzhou International reported that from January to September 2017, the company achieved a total turnover of US$16.285 billion. Among them, the total sales in the US market was US$9.63 billion, accounting for 59.13%; the total sales in the Chinese market was US$5.458 billion, accounting for approximately 33.52%. If Sino-US trade war breaks out, then the pork trade of Wanzhou International will inevitably be dragged down and reflected in the stock price.

In contrast to the A-share market, the suspension of the list of concessions is undoubtedly a big plus for the agricultural sector. On March 23, more than 10 agricultural-related stocks were trading daily. Among the pig breeding enterprises, Dakang Agriculture and Xinwufeng have a daily limit. In addition, the industry leader Wen’s shares once rose to 7.65%, Tang Ren Shen (6.27 -0.48%, diagnostic stock), young eagle farming (3.67 -1.61%) , the diagnosis stocks) rose by 4.98%, 4.28%.

However, on the morning of the 26th, the A-share pork sector fell by about 2.32%. As of the close of the afternoon, the leading stocks Wenshi shares temporarily reported 20.3 yuan, down 5.76%; Da Kang agriculture, which had a daily limit on Friday, fell more than 5%, and only the new Wufeng rose 2.41%.

Little impact on domestic pork prices

Pork-related stocks rose first and then fell, mainly because the entire industry lacked a profit base.

Since last year, the pig price has been in a downturn after experiencing the “crazy pig cycle”, going down from more than 20 yuan/kg. GF Securities (16.06 +0.88%, diagnostic stocks) research report pointed out that since February this year, pig prices fell rapidly, continued the decline after the Spring Festival, after entering March, the price came to the shock range. According to the data of, as of March 22, the national average price of pork pigs was 10.38 yuan/kg, which fell below the industry's break-even line. The average loss of self-supporting and self-supporting bars is estimated to be 153.71 yuan/head.

The Sino-US trade war is overcast and tax increases on imported pork. Can it improve the domestic slump market?

Industry insiders told the Daily Economics reporter that the restrictions on importing pork tariffs from the United States are indeed a big plus for the domestic pig industry, but the extent of its impact remains to be seen.

“First of all, the quantity of imported pork is very large in terms of quantity, but in fact, it accounts for a small proportion of both domestic production and consumption,” said a person working in a pig breeding listed company. The favorable incentives for the industry brought about by import restrictions are actually far less than the endogenous fluctuations in domestic hog prices.

According to Feng Yonghui, chief analyst of, although the price of imported pork is lower than the price of domestic pork, at present, the price of domestic pork is already very low. Therefore, the domestic market is not willing to import pork. “Even without this tariff limit, The amount of imported pork this year will also be relatively low."

Will hit the US pork industry

Feng Yonghui said that although the domestic impact is small, for the United States, once the US pork tariffs increase, the US pig breeding industry will face a major blow.

“Although the volume of US pork exports to China in the past two years was not as large as that in Europe, its growth rate is very large. Therefore, the US pig breeding industry is very optimistic about the Chinese market. They believe that they can sell into the Chinese market in large quantities, and many expand production capacity. of."

According to the interviews of many reporters, from 2013 to 2015, China imported pork from the United States around 110,000 tons; in 2016, this value rose to 216,000 tons, an increase of nearly 100%; in 2017, affected by domestic pig prices A sharp drop in the impact of imported pork from the United States is about 166,000 tons. In the past two years, China's imports of pork from the United States accounted for about 13% of the total annual pork imports.

The National Pork Production Association said that there will be no winners in the US trade war.

"We hope that this trade dispute can be resolved through consultation, otherwise the most hurt is the pig farmers in remote areas of the United States."

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2018-3-27 10:06 上传


Bloomberg said that the tariffs imposed on pork by China are just enough for the United States to hit the "seven inches", which will make the US related industries difficult.

Source: Daily Economic News