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There are way too many hogs in the US and not enough exports
[CHICAGO] The world is about to be split in two when it comes to protein.
Output is piling up in North America, while African swine fever shrinks hog herds in Asia.
But, trade disputes are making it hard for the excess supplies of meat to flow into areas where there's a production gap.
The latest evidence of this divide came Thursday, when the US government said the nation's hog herd surged this quarter to the highest since 1943. Inventories jumped 3.6 per cent from last year, beating the 2.6 per cent average estimate in a Bloomberg survey.
American producers are building up the herd in anticipation of increased demand from China - the deadly pig disease has lowered output in the world's top pork-consuming nation.
But US supplies still face tariffs from the Asian nation, and producers like Brazil and the European Union are seeing the demand gains instead, according to Dennis Smith, senior account executive at Archer Financial Services.
Meanwhile, China has halted meat imports from Canada after a pork cargo came attached with counterfeit health certificates. That means North America could end up being swamped with supplies.
Still, the US hog market could eventually find support from increased exports amid the African swine fever outbreak, which has also spread to Vietnam and other parts of Asia, Joe Kerns, president of animal agriculture consulting firm Kerns and Associates in Iowa, said in an email.
Expansion in the US herd is keeping up with increased slaughter capacity, which can also help limit declines in the futures market, he said.