Margins continued to weaken over the first half of April as corn prices advanced while soybean meal traded sideways and hogs are back to where they started the month following a sharp selloff. Traders continue to monitor the evolving trade war, with the Trump Administration initially revealing a reciprocal tariff schedule that was much more severe than most analysts were expecting but relaxing it after a significant drop in the bond market which caused yields to spike. As it stands currently, punitive tariffs continue to be applied to China which now effectively taxes goods shipped to the U.S. at 145% with a temporary exemption for some electronic goods such as cell phones and computers which receive a 20% tariff. For other countries, the baseline tariff of 10% remains in place with a temporary exemption for consumer electronic goods, while for trade with Canada and Mexico, goods compliant with the USMCA agreement are imported tariff-free
when traded among the three countries; however, non-compliant goods are tariffed at 25% except for energy and potash which are tariffed at 10%. While U.S. pork exports to China have declined significantly since the ASF outbreak, dropping from 30% of total exports in 2020 to only 6% last year, more than half the volume of U.S. pork variety meats was shipped to China in 2024 and their 125% tariff which is now applied to all U.S. exports effectively shuts down trade between the two countries. In addition, the reciprocal tariff “pause” to other countries in response to the bond market fallout is only valid for 90 days and there is concern that the previously announced tariffs of 26% to South Korea and 24%
to Japan could significantly impair pork exports to two major markets without an interim deal being reached with each country. Our clients have benefited from protecting historically favorable forward margins when previous opportunities were presented.
he Hog Margin calculation assumes that 73 lbs of soybean meal and 5.3 bushels of corn are required to produce 100 lean hog lbs. Additional assumed costs include $44 per cwt for other feed and non-feed expenses.
Hog Margin Watch reports are provided by CIH. Click here to see CIH Hog Services.
