UTRECHT, The Netherlands – The looming impact of animal diseases, the threat of continued trade disputes and volatile pricing are feeding the uncertainty felt by stakeholders in the global pork market. According to Rabobank’s latest “Pork Quarterly Q1 2019” report, the continued spread of African Swine Fever (ASF) in China and eastern Europe, in addition to the threat of outbreaks of foot-and-mouth-disease, swine fever and Porcine Epidemic Diarrhea virus (PEDv) in other regions, will have a ripple effect on the pork industry globally.
ASF is the biggest challenge facing global pork in the coming year, said Chenjun Pan, Rabobank’s senior analyst for animal protein.
“The changes ASF will bring create opportunities for some, and threats for others,” he said.
China’s need to bolster pork imports to offset the rapid spread of ASF comes at a time when increases in production are expected in some global markets, but the likelihood of supply keeping up with demand is a cause for concern, according to the report.
In China, “ASF outbreaks on large, modern farms have astonished the market,” the Rabobank report states. “ASF is reshaping the industry,” as higher production numbers are expected to maintain through the first quarter but be tempered later in the year as biosecurity measures will likely lead to supply shortages. More than 100 cases of ASF across 24 provinces have been reported in China. Brazil is expected to be a benefactor of China’s growing demand for pork after a somewhat tumultuous 2018. Improving economic conditions in Brazil are positively impacting its pork industry, aided in part by the resumption of shipments to Russia.
Countries in the European Union are facing uncertainty in 2019 as indicators of higher production signal the positive impact of growing demand from China, while Belgium and eastern Europe struggle to stave off the spread of ASF. Uneasiness about global pork trade in some markets is fueled by unresolved trade talks between China and the US over the possibility of retaliatory tariffs on US imports as well as the dynamics surrounding Brexit and the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Despite the unknown outcome of the trade negotiations with China, US trade officials are expecting a 4 percent increase in the production of pork in 2019. Japan and South Korea proved to be strong markets for US pork in 2018 and that demand is expected to continue this year. Export access improvement for the US is supporting strong hog prices, according to Rabobank.