Traders Spooked as African Swine Fever Keeps Spreading
Disease hits almost all China, 23 cities, provinces in Vietnam
China meal demand seen down for first time in more than decade
By Alfred Cang and Atul Prakash, Bloomberg
April 8, 2019
The relentless proliferation of African swine fever on farms in East Asia is sending shivers through the region’s livestock industry, with more than a million hogs culled since the disease first appeared in August, and that’s just according to official tallies.
Demand for soybean meal, an essential ingredient for animal feed, is expected to shrink in China for the first time in more than a decade after the sickness spread to almost the entire country. The nation is the world’s biggest hog producer and top importer of soybeans. In Vietnam, the virus has reached 23 provinces and cities, while about 10 percent of the herd in Mongolia has perished or been destroyed since January. Thailand is keeping a close vigil after cases were reported in neighboring Cambodia.
The deadly pig illness has the potential to further depress soymeal futures in China, which have already slumped 25 percent from an October high. Shrinking hog herds and heavy economic losses for farmers may scar the business for years to come. A recent outbreak of H5N1 bird flu in China’s northeast only adds to their plight. Still, one person’s loss is another’s gain as hog futures in Chicago have soared on optimism over import demand from China.
“The problem we have now is that no one really wants to restock and make that investment for fear of getting hit again,” said Darin Friedrichs, Risk Management Consultant in INTL FCStone’s Asia commodities division. It’s difficult for the market to get an accurate assessment of the damage, he said, as some outbreaks haven’t been reported.
Supply and demand for hogs is basically balanced short term, but supply is going to tighten and that’s set to continue for a long time, according to the Animal Husbandry & Veterinary Bureau of China’s Shandong province. Farmers are selling pigs at a faster pace and not replenishing stocks, it said. The country has more than 400 million pigs, and pork is the principal source of dietary protein...
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