ETFs & Stocks in Focus as China Plans to Import Pork


Sweta Killa, Zacks

via Yahoo Finance - September 13, 2019


With the 70th anniversary of the People’s Republic of China around the corner, the country has been concerned about the impact of the spike in pork price on economic growth. This is because the price of the staple food jumped 47% in August due to an outbreak of African swine fever, a fatal pig virus that has reduced the Chinese herd, curtailing supply of pork.


In fact, the disease has already resulted in China losing more than 100 million pigs over the last year, and it could end up killing up to half of its pig population.


In order to stabilize pork price, China wants to increase purchases of pork from overseas, including the United States and European Union. The plan will also aid Beijing’s potential move to ease trade tensions with Washington by resuming imports of U.S. farm goods ahead of talks in coming weeks. Beijing imposed retaliatory tariffs of 50% on imports of U.S. pork last year and raised tariffs by another 10% on Sep 1. The move has brought the total tariff on U.S. pork to 72% compared with 12% duty prior to the trade war (read: ETFs in Focus as Trade War Takes a Toll on Chinese Exports).


China has bought about a million tons of pork so far this year, of which about 87,771 tons were from the United States, according to Chinese customs data. According to Vice Premier Hu Chunhua, increased imports will only address supply shortages and not the halt in soaring price of pork. China is likely to see a 10 million ton pork deficit this year and more than the roughly 8 million tons in annual global trade.


Market Impact


The news of China buying pork has resulted in an astounding rally in the U.S. lean hog futures market. U.S. lean hog futures climbed the daily exchange-imposed limit on Sep 12 and the Chicago Mercantile Exchange (CME) temporarily expanded the trading limit to 4.5 cents.


That said, we present some ETFs & stocks that are the biggest beneficiaries of the China buying pork and lean hog rally:


iPath Bloomberg Livestock Subindex Total Return ETN COW ...


VanEck Vectors Agribusiness ETF MOO ...


Tyson Foods Inc. TSN ...


Pilgrim's Pride Corporation PPC ...