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China's pork imports to accelerate, as herd heads for smallest since 1983

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China’s pork imports are poised to hit an even higher record than had been expected this year, and soar a further 40% in 2020 - as African swine fever drives the country’s swine herd to the smallest since 1983.

 

The US Department of Agriculture’s Beijing bureau forecast China’s pork imports rising by 1.0m tonnes to 2.50m tonnes in calendar 2019.

 

That compares with an official USDA forecast of 2.20m tonnes, which would only narrowly beat the current record of 2.18m tonnes set three years ago.

 

While China’s pork imports had proved slower than expected early in 2019, this reflected factors such as the amount of the meat in cold stores, thanks to an accelerated slaughter in the face of the African swine fever (ASF) epidemic, and in bonded warehouses on hopes of a removal of tariffs on imports from the US.

 

“Despite the slow start to the year, imports are expected to pick up in the latter half of 2019,” the bureau said, adding that the “lion’s share” of the 2.50m tonnes in shipments forecast “are expected to ship during the last three months”

 

Smallest herd since 1983

In 2020, imports will grow even further, to 3.50m tonnes – equivalent to 40% of world shipments at this year’s levels – “as domestic supplies are unable to meet” Chinese demand for pork, even though this is on a declining trend, thanks to “unfounded” food safety concerns over ASF.

 

While forecasting some efforts by Chinese producers at herd rebuilding “throughout 2020, the overall pig crop and the available pigs for slaughtering will continue to be constrained”.

 

Indeed, the bureau forecast the Chinese pig herd ending 2020 at 306.1m head – the lowest in 37 years, and down by 34.0m head year on year.

 

This after a 2019 in which the herd was seen shrinking by 88.0m head, or 21% - twice the rate currently forecast by the USDA itself.

 

‘Widespread, uncontrolled ASF’

“Due to the massive size and density of China’s swine herd and the wide geographic spread of the disease, the animal health risk presented by ASF in China is unprecedented,” the bureau said, noting “widespread, uncontrolled ASF persistence in China”.

 

“Based on extensive interviews with industry and supported by price dynamics (for live animals and feed), the number of actual outbreaks far exceeds” the total that China’s farm ministry has reported to the World Organization for Animal Health.

 

Nonetheless, the bureau raised doubts over forecasts from other commentators of up to 70% herd loss this year, saying that these appeared exaggerated.

 

“Despite reports of much higher losses, multiple interviews across a broad cross-section of the industry, combined with information from the animal feed sector, suggest a measured herd reduction in 2019.”

 

By comparison, Rabobank, for instance, has estimated a loss of 150m-200m pigs this year "due to ASF".

 

‘Hoping to strike it rich’

“Drastic reductions in the swine inventory are not supported by feed demand analysis,” the bureau said, standing by ideas of a drop of 8% in overall corn use for feed in China in 2018-19, and of “only” 5% for soymeal.

 

“In addition, prices for corn and soybeans have remained relatively strong throughout the first six months of 2019, supporting sustained feed demand for hogs.”

 

Furthermore, the bureau said that “attempts at restocking have already begun”, if largely by small farmers unwilling to “pass up the opportunity” to profit from rising swine prices.

 

“Several industry experts have compared these small farmers to gamblers, hoping to strike it rich by avoiding ASF” in their renewed herds.

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