Pigs are flying higher this week after China made massive purchases of U.S. pork. The U.S. and China are moving ever-closer to a trade deal, and China is desperate for pork due to a disease ravaging its hog herds.
The highly contagious African swine fever (which does not affect humans) has swept across China and has likely wiped out a substantial portion of China’s hog production. Official statements regarding losses are believed to understate the issue, but private estimators are expecting that the disease could wipe out over a third of China’s supply.
China is the world’s largest pork producer and consumer, and the disease is beginning to force the Chinese to buy foreign pork, including U.S. meat, even as trade-war-related tariffs are in still in place.
This buying and expectations for even more after a trade deal is cut have caused U.S. hog futures to explode as much as 30% higher since late February, pushing most futures markets to contract highs.