World pork trade is becoming increasingly complex — Rabobank

Submitted by bashun on Thu, 07/12/2018 - 14:21

World pork trade continues to grow, but it is becoming an increasingly complex process with high competition in major markets. This is reported in his analysis of Rabobank, reported.

China and some other Asian countries are the main markets for the largest exporters: the EU, the US, Canada and Brazil. "World pork trade continues to change, both for exporting countries and for importing countries. And pork products continue to adapt to changes in demand," Jan-Peter Van Fernij, a senior analyst at Rabobank said.

However, a decrease in consumption in some markets and the risks associated with various diseases, such as the porcine epidemic diarrhea (PED) or African swine fever, are big problems for producers.

China is the largest pork market, and will remain so, but over the past 12 months, this market has faced an increase in domestic production. Low prices led to the elimination of pigs, which led to an increase in pork production in the first quarter of this year.

According to data released by the Chinese Ministry of Agriculture, during the first three months of 2018 slaughter of pigs increased by 1.9%, to about 200 million heads of cattle, and pork production increased by 2.1% to 15.4 million tons.

The trend persists, as Chinese pig producers reduced the nimber of pigs in May this year by 1.9% compared to the previous month. In addition, the number of sows decreased by 2.5%. Compared with May of 2017, pigs in China decreased by 3.9%.

The consumption of pork in this market will remain unchanged for the next 4 years, at 58 million tons, according to the long-term forecast of Rabobank. A small increase should be expected only in 2023, analysts say. EU producers ship about 60% of pork to the Chinese market, and Germany and Spain are the leading suppliers, with a share in the total supply of European pork to China at 15% and 13% respectively. In the coming years, imports may fluctuate depending on the development of demand.

Caught in a "trade war" with China, US pork may lose market share, but at the moment China does not seem to require another supplier. "Perhaps the EU is just not lucky: Europe has a competitive advantage over American pork in China at the very moment when Chinese demand for imported pork is slowing," Dr. John Stark noted.

In this situation European pig producers can only hope that there will be other markets for pork products.

Japan could become an alternative market for pork suppliers, as the local population is changing its diet, and national production is slowly declining. In addition, South Korea, Taiwan, and the Philippines have increased demand for imported pork, but the opportunities in these markets depend on the type of pork products that consumers demand.

Last year the world pork trade amounted to 8.3 million tons worth more than $ 20 billion. The volume is 7.5% of world production and 91% is exported by four leading producers: the EU, the USA, Brazil and Canada. Frozen products are the main elements present in the world pork trade.

Between 2010 and 2018 world trade of pig products increased by more than 37%, despite a slight decline last year due to a decrease in demand for imports from China, Rabobank experts said.

The EU exported 2.9 million tons of pork and offal in 2017 and 75% of this volume was delivered to Asia. However, the risks of biosecurity associated with the spread of African swine fever (ASF) in Eastern and Central Europe, could destroy the entire industry if the virus reaches, for example, Germany.

By now, Romania, Bulgaria, Hungary, Poland and the Czech Republic have registered cases of ASF among the population of wild boars and pig farms. Computer modeling showed that the virus could get to Germany. In fact, a group of researchers from Poland believes that this can become a reality in the period of 4 years.

If ASF gets to Germany, and one of the largest pork producers and exporters in the EU will be forced to restrict the export of pork, this could have a significant impact on world pork trade, with consequences for the entire industry in the region, as competition in the world pork market will grow in the next few years.


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