Tyson Slices Outlook After Tariffs Butcher Pork Shipments To Mexico — Panjiva
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Tyson Slices Outlook After Tariffs Butcher Pork Shipments To Mexico

Ags - Meat/Dairy 138 Cons. Staples - Food/Beverages 395 Mexico 505 Tariffs 1169 U.S. 3297

Food manufacturer Tyson Foods has cut its fiscal 2018 (to September 30) earnings outlook by 10.4% to 13.0% due to “Uncertainty in trade policies and increased tariffs negatively impacting domestic and export prices” among other reasons. Being a seller of commodity products the company does not necessarily have the ability to pass-along higher costs in the form of higher prices to consumers. It is also is one of the few food companies to report a negative impact from duties, as outlined in Panjiva research of July 27.

Tyson faces two main challenges in terms of duties with tariffs applied by the Chinese and Mexican governments in retaliation for America’s section 232 steel and aluminum reviews. The recently announced $12 billion of support for the farming industry by the Trump administration will be temporary and may not offset a significant part of the lost sales.

Panjiva data shows Mexican imports from the U.S. of Tyson’s products broadly fell by 4.1% in calendar 2Q, including a 16.3% decline in the month of June.

STARTING TO SQUEAL

Chart shows Mexican imports associated with Tyson Foods. Lower panel indicates change vs. a year earlier.   Source: Panjiva

By product that was the result of a 19.5% slump in shipments of pork in the quarter (18.7% in June) being only partly offset by a 19.7% increase in exports of chicken (10.8% in June) from the U.S. to Mexico.

PIGS ARE OUT WHILE CHICKENS FLY

Chart segments Mexican imports associated with Tyson Foods by product (HS-4 where 0203 = pork, 0207 = chicken).   Source: Panjiva

One challenge for the Mexican government in maintaining duties is to ensure there are alternative sources of supplies. In the case of pork the only other major supplier at this stage is Canada, exports from which increased by 17.3% on a year earlier in June but still only accounted for 11.0% of the total vs. America’s 88.9%. The leading supplier from Canada was Bassett & Walker (10.7% of shipments) followed by Hylife (8.1%) and Maple Leaf (6.4%).

LITTLE CHOICE BUT FOR AMERICAN PORK

Chart segments Mexican imports of pork by country of origin and shipper for the 12 months to June 30, denominated in dollars.   Source: Panjiva

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