While there is a lot of uncertainty going forward, and we think China may not buy as much from the US if the tariffs persist, we still expect a significant increase in Chinese pork exports in the second half of the year vs. last year’s levels. This should help support overall pork cutout values. Our current forecast is for the cutout average of $84/cwt in the second half of the year, 14.5% higher than a year ago. The chart on page 1 puts the pork cutout numbers in perspective.

The chart shows the relationship between domestic per capita pork consumption in the US and the pork cutout. Please note that we use a deflated cutout value using the Personal Consumption Expenditure index. The goal is to remove the inflation impact. As you can see, the relationship is not extremely tight for the simple reason that the US pork market has become increasingly dependent on export markets in the last 20 years. The pork cutout value was above the long-run trend in 2017 on robust domestic and export demand.