Topline: As the coronavirus outbreak has limited shipments into China, the price of U.S. exports like lobster — and, to a lesser extent, pork, chicken and beef — has dropped for U.S. consumers (but don’t expect that to last).
- Lobster has fallen to its lowest price in four years after charter flights from North American to Asia came to a standstill during the onset of the coronavirus outbreak.
- As a result, thousands of pounds of surplus lobster have drowned markets in North America and pushed prices down.
- According to Bloomberg, the price for a 1.5 pound lobster from New England has fallen by 17% since January to $8.10, in a time of year when prices typically rise to somewhere around $9.85.
- Seafood companies in Australia and New Zealand have also seen a drop in business from China’s slowdown.
Key background: As China’s middle class grew and developed a taste for luxury, the U.S. came to be the top supplier of lobster for the country—until 2018, when the tariff war between Washington and Beijing had Chinese favoring Canada as a supplier. Before coronavirus, Canada alone sent about 1.5 million pounds of lobster on nine charter flights per week to Asia, Bloomberg reported. But lobster isn’t the only industry hurting because of coronavirus. The meat price index has taken a 2% hit as imports to China slowed, Reuters reported. On Thursday, U.S. live cattle futures began to fall as markets worried that the virus would hurt global demand for beef. On Friday futures set a low, down 16% from their peak. With exports slowed, U.S. cold storage facilities have seen the number of chicken breasts, thigh meat and drumsticks rise by 12% over January to a total of 957.5 million pounds, The Wall Street Journal reported.
Crucial quote: “Prices [for meat] have gone down. It’s a combination of general reduction in commerce [in China], people eating in more and eating out less, the ports are backed up and exports are not getting in,” says Adam Stout, a risk management consultant at INTL FCStone.
According to Stout, there was already a meat deficit because of the African swine fever China has been battling since 2018. The U.S. pork industry has become increasingly dependent on the export demand in China, more than the beef and poultry industries. However, Stout is optimistic that there’s a light at the end of the tunnel.
What to watch for: “If you were to look at China specifically, you would see things are starting to improve, getting the economy up and moving and reducing congestion at ports. I think that will continue to improve,” Stout said. “We will need to experience similar improvements in other places—South Korea is increasingly important to us.”
Tangent: At least one country will see more food exports to China: according to The Bangkok Post, Thailand’s food exports to China are likely to double next quarter once food stocks are consumed.
I am a Texas native interning at the Forbes office in London, and have previously been published in London and Austin newspapers. I am an alum of City, University of London and Texas State University.
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