2014 will be defined by biological and political factors. Economics may take a backseat to both.
The two biggest global animal health issues in 2014 will be the PED virus in US pigs and the Russian African Swine Fever (ASF). While we are well aware of the PED virus impacts here, ASF is the most feared pig disease on the planet. There is no vaccine, and the only solution is to cull all pigs and close the operation with no restocking for a number of years. Both diseases are spreading and will have a significant impact on global pork trade due to shifting supply/demand dynamics.
On the political front, Asia and Europe are taking center stage. Assuming the Trans-Pacific Partnership (TPP) trade agreement is completed in 2014, the biggest question revolves around pork access to Japan. In addition, if the TPP is passed, will Congress grant the President Trade Promotion Authority (TPA)? Without TPA, Congress will attempt to add amendments to the TPP, likely causing the agreement to fail. The same clouds hang over the US-EU trade agreement currently under negotiation. Both agreements hold big potential for US pork trade.
What about China? Should China fully open to US beef, and the current dumping and countervailing duties on US poultry be removed, there will be more protein competition in the Chinese market. The lifting of both beef and poultry constraints are very likely in the latter half of 2014. If the US Farm Bill does not move the FSIS "catfish" inspection program back to FDA, however, China, Vietnam and other nations who see the program as trade distorting, could follow through on retaliation as promised. If so, will meat and poultry products be targeted?
With MCOOL still unsettled, potential for retaliation from Canada and Mexico remains. These countries currently by 30% of US meat and poultry exports (and 40% of pork exports). The next step will be the announcement by the WTO on whether the new revised MCOOL requirements bring the rule into WTO compliance. If so, appeals will follow but the rule will likely stand. If not, expect retaliation — directed squarely at ag-state congressmen and senators.
With declining beef supplies and tight pork supplies, perhaps the biggest factor in 2014 will be how much US poultry production expands. If poultry producers can keep a lid on rampant expansion, tight supplies will be very supporting to record high beef and pork prices in 2014.
2014 will be a unique year with exports possibly constrained by tight supplies, but these tight supplies will support prices. US pork will remain a staple in world markets. Our markets have become very globalized, and we must stay plugged into global issues. This year has many challenges, but the outlook is bright for safe, affordable, and globally-competitive US pork.