Poultry making return to China

U.S. producers see opportunity

Chinese customs officials in Shanghai cleared a shipment of almost 24 tons of American chicken feet on Tuesday, marking the potential start of a new trading era between the two countries just before they are to sign a long-awaited trade deal.

The chicken feet, a delicacy used in Chinese recipes, were inspected and approved for unloading in China's most populous city, the official Chinese financial newspaper Securities Times reported. The shipment marks the return of U.S. poultry products in China five years after they were banned, Bloomberg News reported, citing the Chinese newspaper.

China banned all U.S. poultry products in 2015 in response to cases of bird flu in America. That changed last year as demand for chicken, pork and beef increased in China after the spread of the deadly African swine fever cut the nation's hog herds, reducing pork supplies and squeezing prices to record levels.

Farm exports to China are expected to surge if officials sign off as scheduled on the first phase of a trade deal in Washington, D.C., today. Talks between President Donald Trump and Chinese counterpart Xi Jinping have indicated a possible pledge for China to buy as much as $40 billion of farm goods per year.

Corporations responsible for most of America's meat supply, meanwhile, are anticipating the trade opportunity. Chicken producer Sanderson Farms has already shipped more than 40 loads of chicken feet, or paws, to China. The first shipment from Sanderson is scheduled to arrive Thursday, said Mike Cockrell, treasurer and chief financial officer at Sanderson Farms.

"We're pleased that the market is back open again and satisfying their desires for chicken paws," he said in a phone interview. Drumsticks are also on the docket but have not yet been shipped.

Cockrell said he has no concerns about shipping products to China, even duties of 10% and 35% on Sanderson's chicken paws. Chicken feet sell for about $1.10 a pound. The alternative would be to send them to a rendering plant, he said, where the feet are turned into oil and sell for pennies on the dollar.

Tyson Foods Inc. of Springdale, another business poised to benefit from China's meat woes, got the green light to ship chicken there a month ago.

"We expect to send our first shipment to China next week," Hli Yang, a Tyson Foods spokeswoman, said in an email Tuesday.

Tyson, the nation's largest meat producer, has been moving to only buy hogs raised without ractopamine, a feed additive banned in China and other countries, in an effort to export more.

"The global dynamics are changing. They're evolving," Noel White, Tyson's chief executive officer, said in a November earnings call with investors. Products from Australia, New Zealand, South America and more have been moving into China to help fill the protein gap.

Tyson's stock is undervalued, analysts say, despite a 70% climb in value last year on the New York Stock Exchange. Tyson shares fell $1.52, or 1.6%, to close Tuesday at $91.94.

Business on 01/15/2020

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