NEW YORK – Global market challenges from rising disease pressures, especially African swine fever (ASF), continue to cause pork production to drop in Asian countries, Rabobank said in its Pork Quarterly Q3 Report.
“While China’s pork prices have started to move higher, production responses in the rest of the world appear cautious,” Rabobank researchers said. “Other factors, including disease management and weather, are hindering production in Europe and Brazil. The resumption of Sino-US trade negotiations is a positive development, implying a chance for China to review tariffs on US pork imports.”
China remains a cautious trade partner for the rest of the world, according to Rabobank. ASF continues to spread particularly in South China.
“We estimate the herd loss across the country is over 40 percent as of now,” Rabobank reported. “For the whole year, the herd loss could exceed 50 percent on a year-on-year basis.”
The report said that supply is tightening up though with live hogs prices moving higher. Pork imports increased in May as well with more shipment expected for the second half of 2019.
“While fresh meat prices are moving, large inventories of frozen meat continue to pressure prices and weigh on market returns,” Rabobank said.
Eastern European pork producers dealing with ASF and summer heat have slowed production and lessen herd expansion.
“According to industry sources, import demand from China has been slow in recent weeks but is expected to pick-up again over the next quarter,” Rabobank said. “This should maintain upward pressure on prices for most of the next quarter and partially nullify the price declines usually seen in September.”
For the US, pork production in the second part of the year is expected to rise 5.5 percent compared to 2018 according to the report, which will be driven by a large breeding herd and improvement in productivity. Rabobank said pork exporters are struggling because the American competition has better access to the key destinations, but the USMCA trade resolution should boost exports. However, a key constraint in 2019 remains a labor shortage.
With the US still dealing with trade negotiations, Brazil has stepped up its exports to China and Russia.
“Domestic pork prices are rising, as exports are outpacing production growth,” the report said. “If internal consumption picks up in 2H 2019, this will provide further support for prices.”
The rest of the report from Rabobank can be read here.