China will continue to suffer from high pork price the African swine fever wiped out an estimated 20 percent of the population of hogs in China. WH Group sees plans to increase its import to supply the demand. The company that owns the Smithfield Foods of Virginia said that higher tariffs on United States exports weighed heavily on profits.
According to the Chinese government forecasts, pork prices in the country might increase 70 percent to record levels in the second half of the year. WH Group, the largest producer of meat globally plans to grab the opportunity to increase its export to cater to the demand amid high price of local meat.
The company reported a 10 percent decline in its first-quarter operating profit due to oversupply in the hog market in the United States. The company cited higher tariffs on U.S. exports to China as one factor weighing negatively on its business. The company reported that its net profit in 218 dropped 4% to $1.05 billion.
Luis Chein, group director at WH Group, said during an interview that it will be challenging to get the disease contained in a short time. He said that China killed millions of pigs to contain the spread of the virus which means that importers need to purchase supplies from abroad to make up for it. He added that they will increase imports of fresh pork from the United States production base to China.
Glenn Nunziata, chief financial officer (CFO) of Smithfield Foods, a unit of WH Group, said that the trade war needs to end.
He said during a press conference that they are cruising in the first half of 2018, but then the trade war hit them and the rest of the year was tough. He added that losses in the first half of 2019 will be double that of the last quarter of 2018 as the trade war continues.
Gou Lijun, vice-president, and CFO at WH Group said that the company's shipments of pork from Smithfield Foods to its mainland affiliate fell 45% last year.
The United States Department of Agriculture projected last month that China's population of pigs will shrink by 20 percent, 134 million heads, in 219. It will force China to increase its import to cater to the demand for the meat. The Chinese customs data published on May 23 said that the pork import s of China increased 24 percent to 135,517 tonnes from last year.
