herd of pigs
China is expanding its list of pork suppliers while the country's hog herd is shrinking.

UTRECHT, Netherlands – The global market for pork will continue to grow, driven by demand from China which has seen many of its small “backyard” pork producers exit the market, Rabobank said in its Pork Quarterly Q3 2015 report.

The Food & Agribusiness team forecasted growing trade through the second half of 2015. Official data released by Chinese authorities indicated large reductions in total hog inventories in sows which have pressured domestic production and lifted prices. In response, China added seven countries to its list of approved pork importers. But uncertainty remains: Food safety and quality concerns are causing Chinese consumers to seek branded pork, while beef consumption in China is on the rise.

“The main questions are when Chinese import growth will start, how much volume growth there will be and what the support for pork prices will be across the globe,” said Albert Vernooij, Rabobank animal protein analyst.

The United States has the most supplies available; however pork exporters in Europe, Canada and Brazil also are expected to benefit from demand for pork in China.

“… the US has the most volume available after the 2014 PEDv-induced supply surge, but it also has the most challenging competitive position due to the high value of the US dollar and the limited availability of ractopamine-free pork, as demanded by China,” Rabobank said in its report. “This could limit the resulting positive impact on pork prices.”

Recent declines in prices for pork have put the European Union in the running as the second-most-likely supplier of pork for China. “However, it is yet to be seen if this will lead to real price support,” Rabobank said.

Canada and Brazil will fill part of the supply-demand picture for the global pork trade. In Canada, a weaker Canadian dollar and improved competitiveness has significantly narrowed the margin spread between the US and Canada. Meanwhile, high prices for beef in Brazil have helped Brazil’s pork industry maintain margins close to average levels. However, both countries have limited supply volume for export, Rabobank noted.

Diseases continue to drag on pork production in South Korea and Mexico, the Rabobank report said, resulting in higher prices and rising imports.