Beefed-up tariffs leave global protein markets in a stew

The global protein and feed markets will have to make some hard decisions in coming days, with participants considering alternative origins and evaluating costs following US President Donald Trump's April 2 announcement of higher tariffs on imports from most US trading partners.

Futures contracts for key protein, grain and meal commodities fell April 3 on the Chicago Mercantile Exchange and Chicago Board of Trade.

On the CME, the most active Lean Hog Futures Contract for June was down about 1% at market open April 3 at 95.65 cents/lb while the Live Cattle Futures contract for June was down 1% to 205.2 cents/lb.

On CBOT, July corn futures were down 0.5% at $4.62/bushel and May soybean futures were down 2% to $10.10 /bu.

Globally, Brazil's soybean meal futures rose 2.5% to $295/mt in anticipation of increased demand from China. Soybean meal is an important feed for hogs and poultry.

Supply chains shaken

The new tariffs could end up forcing exporters and importers to negotiate new contracts and reassess supply dynamics.

Among US exporters, opinions range from long-term optimism that Trump's tariffs could lead to higher prices and reduced feed costs to pessimism that countermeasures from their biggest markets could lead to trade diversion and reduced consumer demand.

Asia is the largest market for US protein exports, especially pork and beef, as well as for grains such as corn and soybean.

"We're talking $500 million in lost exports to China alone," a member of the US-based National Pork Producers Council told Platts in an email. "That's not easily replaced."

Platts is part of S&P Global Commodity Insights.

US protein producers are considering a pivot to smaller markets such as Southeast Asia, but logistics costs and competition from Australia's beef and New Zealand's lamb could cap gains, analysts say.

"We continue to expect Australian beef and cattle prices to be supported as we move through 2025," Dennis Voznesenski, associate director, agricultural economist at Commonwealth Bank of Australia, told Platts.

Global trade conducted under the World Trade Organization's "most favored nation" rules has now fallen to 74% from 80% at the start of the year, Ngozi Okonjo-Iweala, director-general of the WTO, said, urging all countries to manage resulting pressures responsibly to prevent trade tensions from proliferating.

US farmers criticize tariffs

Groups representing US farmers and food processors voiced discontent with Trump's tariffs.

"We share the administration's goal of leveling the playing field with our international partners, but increased tariffs threaten the economic sustainability of farmers who have lost money on most major crops for the past three years," Zippy Duvall,president of the American Farm Bureau Federation, said.

"One thing is certain: American family farmers and ranchers will bear the brunt of this global trade war," said Rob Larew, president of the Washington-based National Farmers Union, in a statement. "The economic strain and uncertainty that farmers face have reached a breaking point," he added

Beef prices are predicted to increase 5.2% in 2025, while pork prices are predicted to decrease 1.5%, the US Department of Agriculture said in March.

Commodity Insights analysts expect a US tariff war with China and Canada could lower US pork exports considerably in 2025-26 thereby threatening trade of over $600 million.

A Kansas livestock producer expressed more alarm: "This is a heavy blow for pork and beef exporters. We're overwhelmed with supply, but the buyers are disappearing."

Markets eye tariff-free routes

Canada and Mexico, which together account for 25% of US protein imports, may shift exports to Asia or Europe.

"We'll ship pork to Japan before letting it rot," an Alberta, Canada-based hog farmer said.

Japan is the US' second largest market for pork exports after Mexico, US trade data showed.

Major protein suppliers, Brazil and Argentina are already expanding slaughter capacity, and stand to gain. Brazil's pork exports to China jumped 10% to 1.1 million mt in 2024, and market watchers expect this trend to accelerate.

"South America's protein pipeline is ready," said a commodities trader. "They've got land, feed, and no US tariffs to dodge."

In the poultry sector, US exporters of chicken meat are counting on the quality of their products to hold on to their market in the event of a trade war. Mexico is their largest customer and Brazil is their largest competitor, according to customs data.

"The market's watching China's next move and Brazil's harvest," a commodities broker said. "Volatility's the name of the game now."