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[quote user="Murphy Siding"] [quote user="Bucyrus"]   Since it is said that the point of the acquisition was to lock in more supply, then it might be that Shuanghui would sacrifice the higher price of pork in the U.S. market in order to increase supply in the Chinese market.   [/quote]      Did you hear the one about the  Chinese company that bought an American pork processor, in order to sell American pork at lower prices in China?  Me neither.[/quote] I don’t think you are looking at it deeply enough.  Every pork chop Shuanghui sells in the U.S. is one less pork chop they sell in China.  It is true that the U.S. chop sells at a higher price.  But they bought Smithfield to close the production shortfall in China, and to improve the Shuanghui brand in China, so they might prioritize serving the Chinese market.  And considering that they are currently producing 33 times more pork for China than Smithfield produces for the U.S., Shuanghui might decide that it makes better business sense to sell the Smithfield pork in China (although at a lower price) in order to help improve the supply and brand in China where the bulk of their business will be.  In the big picture, they might actually make more money doing that despite sacrificing the higher prices of the smaller U.S. market.  And furthermore, the U.S. pork market is shrinking while the Chinese market is growing, so they might want to favor the Chinese market with brand and supply improvement rather than go after the higher price of the shrinking U.S. market. And still furthermore, I believe the U.S. Smithfield market will be damaged by the reputation of Shuanghui ownership.  If that proves to be the case, then the U.S. Smithfield market will shrink further.  If they are trying to improve their brand image in China and in the world, they might be well served by not getting the publicity of butting heads with brand resistance in the U.S. even though they will get a higher price here. Considering all of those things together, I expect nearly all of the Smithfield pork production to go to China.  And I also expect Shuanghui to expand the Smithfield production in the U.S. as much as regulations and environmental capacity can support.  I don’t know what the limit of the Smithfield production would be, but I would guess that it will be met before the Chinese pork shortfall is ended. So that would be all of pork that even a greatly expanded Smithfield can produce going to China by rail and sea, while other U.S. producers take up the slack and fill in the missing U.S. production from Smithfield.
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