U.S. positioned for slowdown in China's pork demand
Competitive landscape will intensify as China's demand further softens.
Source: U.S. Meat Export Federation (USMEF)†
via National Hog Farmer - Jul 14, 2021
In early 2021 it was difficult to gauge the pace at which China's domestic pork production was rebounding from the impact of African swine fever (ASF). Outbreaks of ASF persisted in several regions, and reliable production data became even more elusive than usual. Government reports suggested a robust swine herd recovery, but this didn't seem to match up with the continued flow of imported pork entering China.
Late spring brought more clarity to the production outlook, as China's live hog and pork prices steadily declined and didnít bottom until June 22. The average live hog price, which began 2021 at nearly $2.50/lb., sank to a low of about $.90/lb. on June 22 before rebounding above $1.05/lb. by the end of June. Prices rebounded further to $1.15/lb. in early July, but this was still more than 50% below year-ago levels.
Another indication of the significant swing in China's pork supply situation is that the government has shifted away from releasing central pork reserves and has begun purchasing pork as a price-stabilizing mechanism. Last year, China's Merchandise Reserve Management Center released a total of 670,000 metric tons (mt) of pork into the market in an effort to ease consumer prices. This practice continued in early 2021, with 210,000 mt auctioned from Jan. 1 through early March. But the last release of pork reserves was March 10, and on July 7 the agency held its first central reserve frozen pork purchasing and storage bidding transaction, for a volume of 20,000 mt.
The U.S. Meat Export Federation (USMEF) expected U.S. pork exports to China to decline in 2021, when compared to last year's very high volumes, but that exports would still be the second largest on record. As projected, pork muscle cut exports to China totaled 266,836 mt through May, down 30% from a year ago but nearly four times the 2019 pace. On a very positive note, pork variety meat exports to China are larger this year, up 15% to 135,000 mt, valued at $329 million (up 17%).
"Finding alternative destinations for pork variety meat is especially challenging, so China's continued demand for those items is very beneficial for the U.S. industry," said USMEF Economist Erin Borror...
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