It never rains but it pours. In China, currently in the midst of the east Asian rainy season, that is literally true. Floods have affected there an estimated 20m people - and it’s bad news for China’s pigs, too. Average rainfall has been at its highest since 1961, when records first started being kept.
The world’s largest pork producer and consumer has only just started recovering from a devastating outbreak of African swine fever (ASF) which is incurable and lethal for pigs (although harmless to humans). The current excessive rainfall - the heaviest since 1961, when records started being kept - has now started spreading ASF once more.
If ASF spreads nationwide in China, as it did in 2019, the knock-on impact will reach far beyond dinner-plates.
Pork barrel politics
China-US relations are the worst they have been for years, yet paradoxically ASF should help cool the tantrums.
As Washington and Beijing engage in tit-for-tat "sanctions" against senior political figures (which are of little real hardship to the individuals concerned), spats over the origins of Covid-19 and China flexing its muscles over Hong Kong, the economically vital trade deal signed between the two countries in January this year seems to be intact. So long as neither side tosses this agreement into the trash can then everything else is just so much foaming at the mouth.
Under "Phase 1" of this deal the US dropped some of its tariffs on Chinese imported goods in return for China’s agreement to increase its spending on US goods - including $32bn additional purchases of agricultural products over the next two years. That’s a lot of soybeans and corn.
ASF in 2019
Last year a nationwide dose of ASF in China reduced the country’s hog herd by around 50%, depending on whose estimate you listen to. According to the country’s National Bureau of Statistics in December last year the price of pork - the nationally preferred meat source - was 110% higher in November year-on-year. Clearly a lot of pigs died from ASF which pushed pork prices sky-high.
This year China has been frenetically trying to re-build its pork stocks. That’s a slow business. It takes about 18 months to re-build pork production at a new farm.
The heavy flooding across the south of China is now causing sporadic outbreaks of ASF. Its spread is not helped by farmers burying ASF-infected pigs; the disease gets into the groundwater. Pork prices in some parts of the country have returned to their high level of last October.
Trade deal intact - for now
The heavy rainfall in China is nevertheless helping to prevent the chilly Sino-US relations from turning into a fresh Cold War.
Last Friday China’s ministry of agriculture forecast the country’s 2019-20 soybean imports will be 94m tonnes, 3m tonnes higher than it said the previous month. It added that its corn imports will be 6m tonnes, 2m tonnes higher than its previous month’s estimate.
China produces about 15% of the soybeans it annually consumes, which is almost 103m tonnes annually - most of that going into pig feed via soymeal. It’s not yet clear how many of China’s pigs will this year be eliminated by ASF but herd overcrowding, and poor farmer disposal of ASF-infected pigs are assisting ASF’s spread and will reduce the herd, causing retail prices to rise, re-stocking to be done - and soybean sales to continue to be strong.