Grains

Animal health officials in southwest Asia are increasing measures to prevent African swine fever from entering their countries, after China reported confirmation of ASF contaminating feed supplies earlier this week. While ASF is not a danger to human health, the virus is nearly lethal to hog populations. The virus can survive long periods in cold and hot weather, has no vaccine or treatment and can remain in processed meat products. Neighboring countries, including South Korea, Ukraine and others are working to fortify safeguards to keep the disease out of their countries, as China continues to report additional cases of the virus in major production areas. South Korea South Korea's Ministry of Agriculture, Food and Rural Affairs said it will utilize big data to increase animal tests on airlines that have high numbers of unregistered livestock product import cases. More X-ray screening will also be done at airports. Quarantine officials will join hands with food safety authorities to clamp down on illegal distributions of banned livestock products sold online and offline and inspect local hog farms to check if they feed unprocessed food wasted to pigs, the ministry said to Korea's YonHap News. Thailand Earlier this month, ASF was found on a small farm in China's Guanfang village, about 124 miles from the border with Myanmar and Laos and near the border of Thailand. Surachai Sutthitham, president of the Thai Swine Raisers Association, said the latest outbreak poses the biggest threat yet to the country's $3.3 billion hog industry. "This is the most worried I've ever been in my 17 years as president," Surachai said in a Bloomberg report. "The government should prepare for the possible outbreak and do whatever it takes to avoid the problem in Thailand." Vietnam With a large number of foreign tourists in the northern border areas with China, Vietnam's animal health department said there's a very high risk of the virus being transmitted. The department's inspection teams will closely monitor trade at the border to prevent the spread. The agriculture ministry has suspended pig-product imports from places reporting ASF outbreaks.

Brazilian meat packer JBS SA has signed a trade pact with Alibaba's Win-Chain that will send approximately $1.5 billion in beef, pork and poultry to China over the next three years. Alibaba, often described as the Amazon of China, is a multinational conglomerate specializing in e-commerce, retail, Internet, AI and technology. The agreement between JBS and Alibaba represents the largest ever signed in the meat sector between Brazil and China, and is scheduled to begin within 30 days. "This deal will significantly expand our beef business and build further value for the Friboi brand," Renato Costa, CEO of JBS, Brazilian beef division said. "We have developed products based on packaging, cuts and portions specifically designed for the Chinese market." Earlier this month, JBS invested $12 million to expand production at two of its Brazilian meat production facilities, in order to specifically meet the increased demand from the Chinese market. "Our brands are increasingly being recognized for the high quality and safety of the food we produce, with product traceability and a sustainable production process - issues of increasing importance to consumers - and they will be available across a variety of channels for either corporate customers - retail and food service - or end consumers," Costa said.

Two key losses by members of the Senate Agriculture Committee opened the door for Republicans to hold control of the upper chamber in Tuesday’s midterm election. Democrats Heidi Heitkamp of North Dakota and Joe Donelly of Indiana lost their contentious reelection bids. Both had voted against confirmation for judge Brett Kavanaugh for the U.S. Supreme Court, and both represented largely red states. Heitkamp was defeated by North Dakota’s at-large Congressman, Kevin Cramer, a Republican who had focused in the campaign on Heitkamp’s Kavanaugh vote and her vote against the Republican tax cut package. Donnelly of Indiana and his opponent, business owner Mike Braun, both campaigned on their ties to President Donald Trump and traded accusations over outsourcing of jobs overseas. Those two Democratic losses were key to Republicans winning a Senate majority of at least 51 seats. Other key Democrats on the Senate Ag Committee won reelection, including ranking member Debbie Stabenow of Michigan.

Pork exports continued to be impacted by retaliatory duties in China and Mexico, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Beef exports cooled from the record results posted in August, but were still significantly higher year-over-year. Pork muscle cut exports improved over last September’s volume, but were offset by sharply lower shipments of pork variety meat. September pork export volume was down 2 percent from a year ago to 179,423 mt, while export value fell 7 percent to $470.2 million. Pork muscle cuts were 2 percent higher than a year ago at 146,542 mt, but value still declined 3 percent to $397.6 million. September variety meat exports dropped significantly in both volume (32,881 mt, down 18 percent) and value ($72.6 million, down 21 percent). For January through September, combined pork and pork variety meat exports were 1 percent above last year’s record pace at 1.81 million mt and 2 percent higher in value at $4.79 billion. For pork muscle cuts only, exports increased 6 percent from a year ago in volume (1.46 million mt), valued at just under $4 billion (up 3 percent). September exports accounted for 24.8 percent of total pork production, up from 23.6 percent a year ago. For muscle cuts only, the percentage exported was 21.8 percent – up two full percentage points from last September. For January through September, pork exports accounted for 26.1 percent of total production, down from 26.5 percent last year, but the percentage of muscle cuts exported increased from 22.1 to 22.7 percent. Export value per head slaughtered was down 1 percent from a year ago in September ($48.72) and for January through September ($52.46). "With a full quarter still to be reported, beef export value records are already being surpassed in some markets and global value is on track for $8 billion by year’s end," said USMEF President and CEO Dan Halstrom. "Pork exports have also held up relatively well, but unfortunately the obstacles U.S. pork faces in China and Mexico are putting a lot of pressure on export value." Korea, Latin America continue to shine for U.S. pork September pork exports to South Korea increased 33 percent from a year ago in volume (12,486 mt) and 30 percent in value ($33.6 million). Through September, exports increased 43 percent in volume (172,022 mt) while export value climbed 48 percent to $489.2 million – already topping the 2017 year-end total of $475 million. U.S. share of Korea’s total pork imports has increased dramatically this year, from 31 to 35 percent, even as imports also trended higher from most of Korea’s main suppliers. Pork exports to South America continued to gain momentum in September, led by strong growth in Colombia and Peru and a rebound in exports to Chile. Through the first three quarters of the year, exports to the region were 27 percent ahead of last year’s record pace in volume (92,252 mt) and 22 percent higher in value ($227.9 million). With steady growth in mainstay markets Honduras and Guatemala and sharply higher shipments to Panama, El Salvador, Nicaragua and Costa Rica, January-September exports to Central America increased 20 percent in volume (58,756 mt) and 17 percent in value ($138.7 million). This region is also coming off a record year in 2017. Exports to the Dominican Republic have already broken the records set last year, with volume climbing 35 percent to 32,859 mt, valued at $71.6 million (up 29 percent). Other January-September results for U.S. pork exports include: Exports to Japan increased 2 percent year-over-year in both volume (295,346 mt) and value ($1.22 billion). This included a 2 percent decrease in chilled pork volume (155,395 mt) while value held steady at $750 million. U.S. share of Japan’s total imports has held relatively steady this year at 35 percent. But with CPTPP set to enter into force Dec. 30 and with the Japan-EU Economic Partnership Agreement also on track to be implemented in the coming months, U.S. pork will soon face significant tariff disadvantages in its leading value market. Despite a fourth straight month in which shipments were below last year’s level, exports to leading volume market Mexico remained 1 percent ahead of last year’s record pace at 589,235 mt. Export value, however, has felt intense pressure from Mexico’s retaliatory duties, dropping 8 percent to $1.01 billion. Canada’s January-September exports to Mexico were up 20 percent to 93,346 mt (valued at $126.5 million, up 25 percent). EU exports also surged to Mexico in July (1,809 mt, up 747 percent) and August (2,343 mt, up 733 percent) and are expected to continue gaining momentum as Spain, Denmark and Germany take advantage of Mexico’s recently implemented duty-free pork quota. Exports to China/Hong Kong declined 26 percent from a year ago to 277,779 mt, with value dropping 14 percent to $667.9 million. This region is the largest destination for U.S. pork variety meat exports, which were down 27 percent in volume (177,747 mt) and 13 percent in value ($466.2 million). Led by strong growth in the Philippines and Vietnam, exports to the ASEAN region increased 40 percent in volume (49,406 mt) and 29 percent in value ($123.5 million). This was fueled by a surge in pork variety meat exports to the region, which more than doubled over last year in both volume (20,111 mt, up 147 percent) and value ($32.2 million, up 122 percent). With solid growth in Australia and a steady performance in New Zealand, exports to Oceania were 11 percent ahead of last year’s pace in volume (62,360 mt) and 10 percent higher in value ($182.3 million).

China is making major changes due to its ongoing trade battle with the U.S. China's Feed Industry Association approving new standards for feed for pigs and chickens. It is lowering the protein levels in pig feed by 1.5% and for chickens by 1%. The government says these new standards would lower China's annual soybean consumption by 14 million metric tons. That's a drop of around 13-percent from last year. The change is expected to lower China's soymeal consumption from 71 million metric tons...to around 60 million metric tons. The ministry did not say when the new standards would take effect.

There are no plans for now to extend tariff aid to farmers in 2019. That announcement came from Agriculture Secretary Sonny Perdue during a visit to Champaign, Illinois. In July, the administration said it would deliver $12 billion in aid to farmers caught up in the trade wars with China. Farmers were able to apply for the first round of that aid last month. Perdue said, "This was put upon farmers after they had made planting decisions for 2018. The market will equilibrate over a period of time and and farmers will look at the markets and make their marketing and planting decisions the way they always do, so there is not an expected or anticipated market facilitation program for 2019." Perdue did confirm the second round of aid payments will be coming in December.