Flow of meat in N. America may fall victim to pork war
Maple Leaf shares take a hit as Canada eyes other markets
China’s suspension of Canadian pork imports could upend North American meat trade flows and potentially exacerbate a glut in the U.S. market.
On Tuesday, the Chinese Embassy in Canada said imports of the meat were halted due to counterfeit health certificates, threatening to derail pork exports that had jumped 50 per cent so far this year over 2018 levels.
Now, Canadian supply originally intended for the Asian country could end up looking for a new home in the U.S. and elsewhere, according to traders and analysts.
Protein shippers across the world have been vying for a share of the Chinese import market after an outbreak of the deadly African swine fever virus resulted in millions of hogs being culled in the world’s top consumer of the meat.
On Wednesday, hog futures for August delivery fell as much as 2.2 per cent to 74.525 cents a pound, before settling down 0.9 per cent lower.
Shares in Canadian meat giant Maple Leaf Foods Inc. headed for their steepest drop in eight months.
Some pork intended for China from Canada may move into the U.S. instead, said Joe Kerns, president of animal agriculture consulting firm Kerns and Associates in Ames, Iowa. “We have too many hams on the market, the product will have to move somewhere and the cross-border transit seems to be the easiest in the short term,” he said in an email.
Hog producers in the U.S. have been lifting production in the hope of shipping more pork to China.
Analysts surveyed by Bloomberg expect the U.S. Department of Agriculture on Thursday to show the hog herd as of June 1 was up 2.6 per cent from a year ago.
“It makes Canada have to go to our other export customers such as Japan and South Korea, and try to do business with them,” Dan Norcini, an Idahobased independent livestock futures trader, said in an email.
“Also, it adds to the total of North American pork production at a time
when we sure as heck do not need any more pork around here,” Norcini said.
China’s suspension of Canadian meat comes at time of escalating tension between the nations after Canada arrested Huawei Technologies Co. chief financial officer Meng Wanzhou at the request of U.S. authorities last year.
China has since detained two Canadians and revoked canola import licences for two Canadian exporters, citing pests being found in shipments.
The Asian nation’s investigation into traces of a banned feed additive led to the discovery of counterfeit health certificates attached to a pork shipment.
Marie-Claude Bibeau, Canada’s minister of agriculture and agri-food, confirmed that “inauthentic export certificates” were used.
Maple Leaf shares were down 3.5 per cent at 2:48 p.m.
In an email, the Mississaugabased company said it would “work with government officials to ensure that our valued customer’s concerns are addressed quickly and thoroughly.”