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Pigs may complicate US-China trade negotiations

A report says a decline in soybean imported from the US to feed fewer pigs in China could complicate US-China trade negotiations.

In this picture taken on June 5, 2017 a piglet is seen at a pig farm on the outskirts of Beijing. 
Millions of backyard pig farmers in China are being forced out of the industry as the government cracks down on pollution and encourages producers to expand their operations with the aim of modernizing the industry and smoothing out fluctuations in prices and supply. / AFP PHOTO / NICOLAS ASFOURI / TO GO WITH: China-agriculture-economy-pork, FOCUS by Allison JACKSON        (Photo credit should read NICOLAS ASFOURI/AFP/Getty Images)
Image: An outbreak of African swine fever has led to 20% drop in pig population in China for 2019
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The decline in pig numbers in China could make trade negotiations with the US more complicated, according to new research.

A sharp decline in China's pig population due to an epidemic of African swine fever has reduced the amount of animal feed imported from the United States, according to an analysis by HSBC Global Research.

Soybeans are primarily used to feed pigs in China with the majority imported from the United States and Brazil.

The research says a lower demand in animal food could "constrain China's ability to substantially increase soybean imports from the US" - a key requirement of President Donald Trump in his negotiations to boost American goods exported to China.

Almost 700 million pigs a year are slaughtered in China and pork is by far the most widely eaten meat. The outbreak in the disease has led to a 20% drop in pig numbers in 2019 alone.

Soybean prices decline as China imports fall
Image: Wholesale soybean prices decline as demand in China falls

The sustained lack of demand to feed a declining pig population has also led to depressed soybean prices hurting American farmers.

This comes as the United States and China engage in a trade war after President Trump imposed tariffs to carry out his campaign promise and reduce the trade deficit between the world's two largest economies.

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OWINGS, MD - OCTOBER 19: Farmer Mark Catterton drives a John Deere Harvester while harvesting soybeans during his fall harvest on October 19, 2018 in Owings, Maryland. The majority of Maryland's soybean crop is sold to the state's chicken industry on the eastern shore.  (Photo by Mark Wilson/Getty Images)
Image: Soybean is mostly grown in states that have Republican voting majority

According to the United States Trade Representative's Office, the goods and services trade deficit with China stood at $378.6bn (£297.6bn) in 2018.

While soybean exports to China totalled just $3.1bn (£2.4bn), much of the crop was grown in Republican majority states whose constituents largely back President Trump.

Brent Gloy, an agriculture economist with Agriculture Economic Insights, says there's severe financial distress in the agricultural sector.

He said: "Farmers I talk to, I've been surprised they're supportive as they are, but I think it's starting to wane."

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