Going whole hog: U.S. tells exporters to report pig carcass sales as China buying soars

CHICAGO (Reuters) – The U.S. Department of Agriculture said on Monday that commodity exporters must disclose sales of hog carcasses, giving officials and traders more insight into a surge of Chinese pork buying that has roiled global meat markets.

China’s pork imports have nearly doubled this year as a fatal pig disease has decimated its herd and pushed prices of the country’s favorite meat to record highs. Its beef and chicken imports have also climbed as China is seeking to replace millions of pigs killed by African swine fever.

The USDA published a rule to specify that exporters must report sales of pork and beef carcasses effective immediately because pork sales to China were rising and there was “an apparent lack of commensurate reporting,” according to an emailed statement.

Previously, the USDA told exporters to report sales of “muscle cuts.” Traders said it was unclear whether that included different types of carcasses.

China, the world’s largest pork consumer, is buying U.S. hog carcasses from companies like WH Group’s (0288.HK) Smithfield Foods because Chinese meat processors need entire animals, not just certain cuts, during the disease outbreak, according to analysts.

“These changes will help to provide transparency and eliminate confusion for the industry,” U.S. meat packer Tyson Foods Inc (TSN.N) said.

The USDA publishes export sales data each week that can swing agricultural futures prices. The data was previously incomplete because of uncertainty over reporting carcass sales, said Dennis Smith, commodity broker for Archer Financial Services in Chicago.

Now, exporters know they must disclose sales of whole carcasses, divided carcasses, and those that are boxed.

“The rule is pretty clear now,” Smith said. “It’ll give us a better perspective on the carnage in China – how much pork they actually need.”

U.S. carcass shipments to China began in June after Smithfield Foods, the world’s biggest pork processor, retooled a slaughterhouse to slice hogs into thirds for export to China in boxes. Shipments reached a total of 78,390 tonnes by the end of September, according to USDA data, topping 676 tonnes shipped in 2017.

“Timely reporting and publishing of agricultural export sales data is key to effectively functioning markets,” the USDA said.

Smithfield did not respond to a request for comment.

U.S. processors face a disadvantage for sales to China, compared with other suppliers, because Beijing imposed steep tariffs on U.S. pork as part of the countries’ trade war. Still, Chinese prices are so high that importers are willing to pay the tariff, affecting the U.S. market.