USA; Washington. The US Department of Agriculture is revising downward its forecast for pork production in China. South Korea and the Philippines are importing larger volumes.
African swine fever (ASF) in China and other Asian countries has led to supply shortages there over the past year and, via increased imports, has driven international trade in pork to a new record high. According to the US Department of Agriculture (USDA), global imports and exports have increased by just over a quarter compared to 2019, with orders more than doubling for China, the largest importer. Many analysts previously assumed that the livestock situation would ease in 2021 and that China's imports would drop noticeably again due to growing domestic production. The trend is likely to be the same, but the effect is likely to be smaller than previously thought.
The USDA points out that although pig herds in China have grown noticeably, lower productivity and ongoing animal health problems, including new variants of ASF, are holding back production growth. In addition, high feed costs are likely to lead to declining slaughter weights and lower meat production growth. While Washington analysts in January still expected Chinese pork production to increase by 20% year-on-year to 43.5 mill. t in 2021, the current April forecast expects "only" an 11% increase to 40.5 mill. t.
The Dutch Rabobank recently took a similar view, assuming a year-on-year increase in production of between 8 and 10%. Although pig slaughterings at the beginning of the year had been well above the previous year's level, this was to be seen as "herd liquidation" due to health problems in the herd. From the second quarter, the growth in slaughterings will be lower, the bankers said. According to current forecasts, China's pork production this year will be below 2019 levels and well below pre-ASF volumes of around 54 mill. t.
USDA also revised its forecast for Chinese pork consumption downward from January, but not as much as on the production side. Consumption is now expected to increase by 3.7 mill. t, or 9 %, to 45.3 mill. t. This would make the supply gap somewhat smaller than in 2020, but it would still remain extensive. This has implications for import requirements. According to the Washington analysts, China's pork imports are likely to decline by around 430,000 t or 8.9% to 4.85 mill. t compared to 2020; however, a minus of 12.5% had still been forecast in January.
However, Rabobank recently expressed a more cautious view, estimating a 10 to 30% decline in imports. The wide range is a result of unclear data, especially on the extent of animal health problems, the bankers explained. Last week, however, China's Customs Administration reported record meat imports for March of more than one million tons. In the first quarter of 2021, total meat imports of 2.63 mill. t exceeded last year's level by just over 20%; about half of that was pork. Reports from Brazil and many EU countries, particularly Spain and Denmark, also show strong import demand from the Chinese for pork in the first months of this year, which so far does not appear to match the projected import decline. However, the US reported a 22% drop in Chinese exports for January and February.
China accounted for nearly half of the world's pork imports last year, so developments in that country have a major impact on global events. According to USDA, China's projected import decline is likely to be nearly offset by increased purchases from other countries, falling just 0.5% short of the record pork trade level set in 2020 this year. This is also likely to be helped by the fact that sales in the foodservice sector are expected to pick up as corona problems fade.
This could have a particular impact in South Korea, where pork imports are expected to increase by just over 16% to 645,000 t, up from a 20% slump in 2020. A strong international demand driver is also likely to be the Philippines, where the government has announced higher imports and tariff reductions for the purpose of price moderation in ASF times. USDA anticipates a doubling of sourcing to 350,000 t. In addition, Japan, Mexico and Australia are forecast to have moderately higher pork imports than in 2020.
For its own country, USDA also expects increased imports, up nearly seven percent to 438,000 t. This is due to the fact that, for the first time, the USDA is now also assuming lower pork production in its own country due to declining pig stocks; however, the minus is only put at 0.1%. Other US analysts, however, predict a much sharper decline, pointing to the 4% drop in slaughterings so far this year.
With lower domestic production and high prices expected, USDA experts do not expect the US to be a winner among global pork exporters in 2021. Instead, exports are expected to decline 0.4% to 3.29 mill. t; however, that would still be the second-highest volume ever.
The situation is different in Brazil, with a growing pig herd and rising production, which is why exports from this country are expected to increase by a good 6% to a record level of 1.25 mill. t. Shipments to China in particular are expected to increase further. Russia is also expanding its capacity strongly and, according to the USDA, can expect exports to increase by 9% to 170,000 t, after exports had already more than doubled in 2020.
Mexico is also expected to sell more pork internationally, with an increase of nearly 5% to 360,000 t, with the US being the largest buyer. The European Union, on the other hand, is expected to see a 3.2% drop in pork exports to 4.40 mill. t due to likely weaker sales in China and ASF problems in some countries; however, the EU would remain by far the largest global supplier.
The EU Commission, in its recently published spring forecast, also projects that after two years of significant increases in pork exports, third-country sales by member states will weaken somewhat in 2021, by 3.2% to 4.83 mill. t, including byproducts. Regarding pork production, a year-on-year increase of 163,000 t, or 0.7%, to 23.43 mill. t is expected, down from a 1% decline anticipated in the fall of 2020. Experts from Brussels justified this with the December livestock census results, according to which the total EU pig herd grew by a good three million animals or 2.1% year-on-year to 146.2 million head, and the sow herd decreased by only 0.5%.
However, analysts at the Danish Agri-Food Federation (L&F) pointed out that there had been a backlog of pigs in several countries at the time of the survey, which skewed the results upward. The same applied to the higher figures from France because of methodological changes, they said. Excluding France, the EU sow population had fallen by 1.2%.
On the positive side, the EU Commission sees pork consumption in the Community, which is expected to increase again by an average of 0.5 kg to 32.7 kg per capita in 2020 after the more significant Corona decline. However, this would not reach the pre-Corona level.