February 2, 2021
3.5 million tonnes of pork looking for a new home
China's pork import boom has peaked and intense market share competition is just starting.
By Eric J. Brooks
An eFeedLink Hot Topic
Most businesspeople would be toasting their success but western pork exporters are too afraid to celebrate their recent windfalls. Exports grew a whopping 17% yearly from 2018 through 2020 –and China is behind both their prosperity – and their greatest fears.
With China recovering from African swine fever, world pork production is recovering at the expense of the world pork trade. After growing 5.6% annually from 2000 through 2018 and 17.3% yearly from 2018 through 2020, 2021 world pork exports are falling by 2.1% or 234,000 tonnes. From 11.339 million tonnes in 2020, they will fall to a USDA estimated 11.105 million tonnes this year –with the prospect of stagnant or declining export volumes all the way to 2025.
On one hand, after falling 13.4% over two years from a USDA estimated 112.94 million tonnes in 2018 to 97.76 million tonnes in 2020, world pork output is rising a sharp 6.1% in 2021, to 103.76 million tonnes. This is mostly due to China: After falling 29.7% in two years from 54.04 million to 38.0 million tonnes in 2020, China's pork production will rebound 14.5% to 43.50 million tonnes in 2021.
On the other hand, after rising a whopping 26.3% from 8.45 million to 10.67 million tonnes, world pork exports are falling back 2.8% to 10.39 million tonnes – with the prospect of exports falling or stagnating for the at least five years. From 1.45 million tonnes in 2018, a combination of falling Chinese pork production and resilient swine meat consumption tripled import volumes to 5.15 million tonnes in 2020.
With Chinese pork production now rising faster than consumption, its import volume will decline a USDA projected 10.3% or 0.53 million tonnes to 4.62 million tonnes in 2020. By 2025, China's import volume will fall into the 1.2 to 1.7 million tonnes. Even though 2021's Vietnamese (-16.4%) and Philippine (-32.2%) pork output remain a collective 0.97 million tonnes below peak levels, this is greatly counterbalanced by China's USDA estimated 5.5 million tonne output increase.
Interestingly, the attached graph shows that while post-2020 pork exports will be flat, the industry is now in a zero-sum-game – where sharply falling exports from the EU and smaller declines in US and Canadian shipments are offset by rising shipments from Brazil.
Going forward, China's pork import volume is expected to fall from 5.15 million tonnes in 2020 to 4.6 million tonnes this year and into the 1.2 million tonnes to 1.7 million tonnes range by 2025. To accommodate this pending 3.3 to 3.8 million tonnes decrease in Chinese pork buying, the imports of all other nations would have to grow by 9% annually or by a cumulative 54% or 3 million tonnes by 2025.
With much of the world economy in a depressed state and in COVID-19 lockdowns, it is highly unlikely that the collective pork imports of Japan, South Korea and other major importers can grow at anywhere near a 9% annual rate over the next five years.
In a booming world pork market, many market share losses are often offset by the market's overall growth, meaning that even less successful exporters will enjoy flat or slow growing shipment volumes. That won't be the case for the next five years: Pork supplying nations will be lucky if total 2025 exports are the same as they were in 2020 –with a very high chance that the rising production of pork exporting nations will fight fiercely to preserve their share of a shrinking market.
With much of the world in COVID-19 lockdowns, it is unlikely that rapid domestic demand growth in America, Brazil or Europe can be substituted in place of a declining export trade any time before 2023. The fast recovering Chinese swine sector's Heaven is the world pork market's Hell.
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