Smithfield Foods (SFD) Shares Rise on New FTA's With South Korea, Panama, Colombia; Deutsche Bank Weighs In
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Price: $22.25 -0.13%
Rating Summary:
11 Buy, 6 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
11 Buy, 6 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Shares of Smithfield Foods (Nasdaq: SFD) are trading up 3.9 percent to $22.19 Friday, the day following Congress' passage of stalled free trade agreements with South Korea, Panama, and Colombia.
CEO of Smithfield, C. Larry Pope said Thursday afternoon the new free trade agreements are, "a major victory for the United States, our economy, and in particular the American pork industry."
As Smithfield is the largest pork producer and processor in the world, Pope highlights the new FTA agreements "have the potential to generate hundreds of millions of dollars in U.S. pork exports in the coming years, while creating new jobs." South Korea's meat and poultry export market is currently the fourth largest in the world and forecast to grow by $2.1 billion annually.
In a research note from Friday morning, Deutsche Bank noted South Korea accounted for 5 percent of U.S. pork exports in 2010. The firm estimates the country will garner about 11 percent of total exports for 2011. Korea's 40 percent tariff on beef muscle cut imports and 18-27 percent tariffs on beef offal will be terminated over a 15-year process.
An analyst at Deutsche said, "For pork, the USDA states that over 90 percent of U.S. pork will enter the Korean market duty-free on Jan 1, 2016, with many tariffs phasing out sooner. Importantly, the date of the duty-free access will provide U.S. producers an advantage over European and Canadian exporters, according to the Foreign Ag Service. Currently, tariffs on fresh and chilled pork are 22.5 percent with tariffs on frozen pork set at 25 percent. The U.S. holds a 26 percent share of Korean imports with the strongest competition from EU, Canada and Chile."
Domestic pork sales for Smithfield account for 71 percent of its total U.S. sales and 69 percent of total U.S. net income. Internationally, pork sales account for 9.3 percent of total sales and 10.6 percent of its total net income.
CEO of Smithfield, C. Larry Pope said Thursday afternoon the new free trade agreements are, "a major victory for the United States, our economy, and in particular the American pork industry."
As Smithfield is the largest pork producer and processor in the world, Pope highlights the new FTA agreements "have the potential to generate hundreds of millions of dollars in U.S. pork exports in the coming years, while creating new jobs." South Korea's meat and poultry export market is currently the fourth largest in the world and forecast to grow by $2.1 billion annually.
In a research note from Friday morning, Deutsche Bank noted South Korea accounted for 5 percent of U.S. pork exports in 2010. The firm estimates the country will garner about 11 percent of total exports for 2011. Korea's 40 percent tariff on beef muscle cut imports and 18-27 percent tariffs on beef offal will be terminated over a 15-year process.
An analyst at Deutsche said, "For pork, the USDA states that over 90 percent of U.S. pork will enter the Korean market duty-free on Jan 1, 2016, with many tariffs phasing out sooner. Importantly, the date of the duty-free access will provide U.S. producers an advantage over European and Canadian exporters, according to the Foreign Ag Service. Currently, tariffs on fresh and chilled pork are 22.5 percent with tariffs on frozen pork set at 25 percent. The U.S. holds a 26 percent share of Korean imports with the strongest competition from EU, Canada and Chile."
Domestic pork sales for Smithfield account for 71 percent of its total U.S. sales and 69 percent of total U.S. net income. Internationally, pork sales account for 9.3 percent of total sales and 10.6 percent of its total net income.
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