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China tariffs no barrier for emboldened US pork producers

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China tariffs no barrier for emboldened US pork producers

The African swine fever epidemic that has blighted China's hog herds has created an opportunity for overseas suppliers to ramp up activity in the world's largest pork market.

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Source: AP Photo

We report this week that U.S. pork producers have been at the head of the pack, selling more to China in the first eight months of 2019 than they did in all of the previous year.

U.S. companies have faced two major challenges in this endeavor. Escalating tariffs between the two countries have added costs, but that has been no deterrent. Between June and August, sales of U.S. pork to China surpassed pre-trade-war levels.

Another challenge is the use of animal feed additive ractopamine. Ractopamine stimulates the amount of lean meat in hogs and is approved by the U.S. FDA but banned in many other countries, including China. It is no coincidence that Tyson Foods on Oct. 18 joined the growing list of suppliers prohibiting the use of the substance in their pork.

This seems a wise move as the effects of African swine fever look set to persist for the foreseeable future. The U.S. Department of Agriculture's Foreign Agricultural Service expects China's hog herds to fall 40% by the end of 2020 from pre-outbreak levels. African swine fever may have been contained, but the ambitions of U.S. suppliers are anything but.

Consumer Edge is a weekly collection of critical developments across the automotive; retail; and food, beverage and tobacco industries. Drawing on exclusive analysis and value-added content from the Consumer News team at S&P Global Market Intelligence, it is published every Thursday. Click here to subscribe.

Chart of the week

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Automotive

Auto-parts makers prepare nuts and bolts reform as cars go digital, electric

Faced with declining car sales and shrinking profit margins, components-makers are bolstering their digital know-how to go head to head with technology companies on potentially lucrative self-driving and connected car technologies.

US car sales down nearly 10% YOY in Q3 as SUVs, trucks continue to gain

Chart Watch: Most major automakers reported a mixed third quarter in the U.S. as SUV and truck sales continued to rise against a drop in car sales.

Drop in September auto sales is likely momentary dip, experts say

Sales of motor vehicles and auto parts dropped 0.9% in September compared with the previous month, but economists and auto analysts say they consider this a short-term decline.

Retail

Amazon is writing facial recognition legislation to shape its tech future

The e-commerce giant is taking a proactive role in the legislative process as it promotes its own controversial Rekognition software.

Consumer discretionary M&A activity falls 20% YOY by value in Q3'19

For the three months to Sept. 30, the biggest consumer discretionary deal was the $6.55 billion merger of food delivery companies Takeaway.com and Just Eat.

US retail, food services sales unexpectedly post 1st decline in 7 months

Odds of a Fed rate cut in October climbed as the latest retail sales report raises fears of a slowdown in consumer spending, a key pillar of the U.S. economy.

Post-Brexit trade deals cover less than 7% of UK's trade in goods

The U.K. is yet to agree to a trade deal with the European Union, which accounts for 54.4% of its trade in goods, and is struggling to find friends elsewhere.

Food, Beverage & Tobacco

African swine fever pushes China toward US for pork as trade war continues

U.S. pork producers are sending more of the meat to China, leading export quantities above even pre-trade-war levels.

Philip Morris sees opportunity in vaping firestorm, closes book on Altria merger

Controversy hampering the U.S. e-cigarette market gives the company's heated tobacco device an advantage as it rolls out to consumers in Atlanta.

Consumer staples M&A activity falls 48% YOY by value in Q3

PepsiCo's $1.85 billion purchase of Pioneer Foods was the biggest across the S&P 500 Consumer Staples Index in the third quarter of 2019.

S&P 500 Consumer Staples and Discretionary indices

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