May 2, 2019

China, global pork supply disrupted by continual swine fever outbreak

 

 

African swine fever's impact on China - a major pork producer which accounts for around half of the meat's global output - had dented worldwide supplies and drove up prices, CNN reported.  

With its pork production having dropped 10% this year due to the swine fever outbreak, the country is forced to look to imports - namely, those from the EU, Brazil, Canada and the US - which could reach a record high in 2019.

According to Arlan Suderman, chief commodities economist at INTL FCStone, China's pork production could be restored in five to seven years. The country, Suderman noted, "normally accounts for 49% of global pork consumption, while consuming 28% of the world's meat supply.

Meanwhile, in the US, the difference between wholesale and retail pork prices remains stable over the past months, USDA data showed, although prices for lean hog futures have increased.

However, hog prices are near a four-year high and futures for June have rallied nearly 30% since the beginning of March. It is a matter of time before the price increase could become too unsustainable for retailers to bear.

Suderman pointed out that China could attempt to obtain pork bound for US consumers and others in order to meet the demand of Chinese consumers. This action could induce rising pork prices "until the consumer shift to poultry, beef and other options."

In addition, Suderman considers the move "as a long-term issue" that may potentially lead to the increase of "the price of virtually all meat worldwide."

On the other hand, China could fulfill its meat demand through other meats, beside pork. But, this would be a problem due to production challenges like a limited number of refrigerated ocean freighters.

Based on Suderman's estimation, China will have an overall shortfall of 16.2 tonnes of meat over the coming year.

Nicky Shiels, commodities strategist at Scotiabank, commented that pork prices have a significant impact on Chinese and emerging market inflation due to food prices being the "largest factor in consumer inflation - with pork being "the main component." 

 

You can view more market data on China livestock at: www.spoutinfo.com