Peter Duggan, Meat Division, Bord Bia - The Irish Food Board
Global prospects for EU pigmeat suppliers are being helped by ongoing disease challenges in Asia. This will also present opportunities to large net exporters such as the US and Brazil to grow their market share in this region for the year ahead.
Even though Chinese pigmeat production was severely impacted by African Swine Fever (ASF) during 2019. China is still ranked as the number one global pigmeat producer. However, due to the ongoing spread of ASF in China that has contributed to the breeding herd shrinking by almost a half since 2018, Gira anticipate that production will fall by 25% to 27 million tonnes during 2020. This will lead to Chinese pigmeat imports increasing by 42% and reaching record levels at 3.7 million tonnes during 2020 according to the USDA.
However, trade has been hampered in recent weeks due to transport restrictions because of the coronavirus. How the coronavirus plays out will have a major bearing on whether imports reach the USDA target.
Elsewhere in Asia, Vietnam has been significantly impacted by ASF due to its proximity to China coupled with a high degree of trading between both countries which contributed towards the spread of the disease. For 2020, Rabobank expect imports to increase by 24% to 295,000 tonnes. This represents a slowdown in import activity from 2019, where they rose by 81% to around 239,000 tonnes. In the Philippines, the USDA predict that imports will rise by 25% to 300,000 tonnes for 2020 as the impact of herd liquidation starts to kick in.
Some of the leading net exporting countries should capitalise on strengthening Asian demand especially the US, Canada and Brazil during 2020.
According to the USDA, US pigmeat production will rise by 4% to around 13 million tonnes during 2020 reflecting access to cheap grain and ongoing improvements around farm productivity. Industry expectations suggest US pigmeat exports to China could double to 600,000 tonnes during 2020, aided by the recent ‘phase one’ trade agreement between the two nations. China has committed to purchasing an additional $32 billion of agricultural products during a two year period. While this is likely to have some impact on market share for European suppliers, all major exporting nations are likely to benefit from strong demand and pricing from China. However, given the recent events of the coronavirus, it is quite likely that the ‘phase one’ trade agreement which was targeted to start from the middle of February 2020 could be delayed as China comes to terms with the outbreak according to the New York Times. While in Canada, regained market access to China has boosted confidence amongst producers, with production forecast 3% higher at 2.1 million tonnes for 2020.
The reopening of the Russian market to Brazilian suppliers towards the backend of 2018, combined with improved market access to the Chinese market helped boost Brazilian exports by 18% to 860,000 tonnes during 2019. These developments have helped support producer pricing and increased production levels, which should result in Brazilian exports reaching over 1 million tonnes during 2020 despite domestic consumption recovering.
In the EU, the latest breeding herd developments from the EU Commission suggests that production will show little change during 2020 as producers are cautious around expansion due to the potential spread of ASF from Eastern to Western Europe.
References:
https://research.rabobank.com/far/en/sectors/animal-protein/pork-quarterly-q1-2020.html
https://apps.fas.usda.gov/psdonline/circulars/livestock_poultry.pdf
https://www.nytimes.com/2020/02/03/business/economy/coronavirus-china-trade-economy.html