Canada suspects foul play in meat shipment that led to China ban
By MICHAEL HIRTZER AND ASHLEY ROBINSON | Bloomberg | Published: June 27, 2019
A controversial pork shipment that prompted China to halt Canadian imports may have come from someplace else, according to the government in Ottawa.
China's suspension threatens to upend meat trade flows at a time when African swine fever is already disrupting markets across the globe. Meanwhile, Canada said it's investigating the pork cargo, which came attached with counterfeit health certificates.
"There is someone out there who is falsifying Canadian certificates because they think it is in their interest to do it," Trade Minister Jim Carr said in an interview with BNN Bloomberg. "It's criminal and we'll get to the bottom of it as soon as we can."
The government has called in the Royal Canadian Mounted Police to probe the matter.
The Chinese suspension coincides with flaring tension between the nations following Canada's arrest of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou at the request of the U.S. last year. The Asian nation has since detained two Canadians and revoked canola import licenses for two exporters from Canada, citing pests being found in shipments.
On Tuesday, the Chinese embassy in Canada said pork imports were halted, threatening to derail exports of the meat that had jumped 50% so far this year over 2018 levels. That's sparked speculation that supply originally intended for the Asian nation could end up looking for a new home in the U.S. and elsewhere.
While the U.S. is already facing a glut of meat, supplies are being squeezed in Asia by the spread of the deadly swine fever. Protein shippers across the world have been vying for a share of the Chinese import market after an outbreak of the pig disease resulted in millions of hogs being culled in the world's top consumer of the meat. The suspension will hold Canadian producers back from filling the gap.
"It's unfortunate -- these sorts of things don't help anybody and it will cause problems for our industry," said Daryl Possberg, a producer with Polar Pork Farms, outside of Saskatoon, Saskatchewan.
On Wednesday, hog futures for August delivery fell as much as 2.2% to 74.525 cents a pound, before settling 0.9% lower. They were up 1.3% on Thursday at 10:24 a.m. in Chicago, lifted in part by weekly U.S. Department of Agriculture data showing fresh American pork sales to China.
Hog producers in the U.S. have been lifting production in the hope of shipping more pork to China. Analysts surveyed by Bloomberg expect the U.S. Department of Agriculture on Thursday to show the hog herd as of June 1 was up 2.6% from a year ago.
But the U.S. still faces tariffs from China due to the trade war between Washington and Beijing, which could limit how much the Asian nation buys. That means North America could end up being swamped with meat supplies.
"It makes Canada have to go to our other export customers such as Japan and South Korea, and try to do business with them," Dan Norcini, an Idaho-based independent livestock futures trader, said in an email. "Also, it adds to the total of North American pork production at a time when we sure as heck do not need any more pork around here."
China's investigation into traces of a banned feed additive led to the discovery of counterfeit health certificates attached to the pork shipment. Marie-Claude Bibeau, Canada's minister of agriculture and agri-food, confirmed that "inauthentic export certificates" were used. The import suspension applies to all Canadian meat.
"We produce a lot more than we can eat in Canada, so obviously any time a market gets closed, it's going to have an impact on us," said Ryan Thompson, a beef farmer at Living Sky Beef near Minton, Saskatchewan.