Resurgence of ASF in China push global pork prices up

Published 2021년 5월 10일

The Chinese hog industry was expecting a stellar rebound from African Swine Fever that tortured the industry since 2018 as it entered 2021. However, at the beginning of the year, the new variant of ASF disease placed a major brake on its road to recovery. The bad news that implied potential supply shortages of pork transcended crucial implications on the pork prices of China's key pork trading partners.

China’s Pork Market

Keeping up with its massive geographical size, China produces and consumes an immense amount of pork each year. Most of its production was domestically consumed, with shortages covered by imports. Its annual pork imports reach millions of metric tons on average, wherein it imported 4.4 million MT of pork in 2020. However, due to the African Swine Fever (ASF) that led to mass culling of swine, the production level has been on a consecutive decline starting mid-2018. In 2019, production declined by 21.3% from the previous year. During the following year, China produced 41.13 million MT of pork, a 3.3% decline from 2019. Sichuan, Henan, and Hunan are the largest pork-producing regions of the country and these top three regions alone produced 14 million MT of pork in 2018. As domestic production lagged behind its citizens’ consumption level, there was a drastic spike in imports from 2019 onwards.

Impact of ASF on Pork Exports to China

The countries that took advantage of the big supply gap left by ASF in China were the US, Spain, Germany, Brazil, and Canada. The export volume of most of these countries almost doubled after ASF hit China. Especially within the US and Spain, the two countries experienced an exponential growth over a year. Entering 2020, the hog industry started to rebound from the daunting ASF virus and showed accelerating recovery. 2021 was predicted to be a stellar year when the hog industry would victoriously rebound from the virus, further boosted by high market prices of pork and larger sow inventories. Moreover, China’s massive appetite for imported pork was expected to decline as its domestic production recovered, especially with the high pork prices serving as an incentive for domestic producers. Thus, Spain, the US, Brazil, Germany, and Canada were to experience a decline in exports to China.

Impact of ASF on Pork Prices

However, entering 2021, the new variant of ASF disease placed a major brake on its road to recovery. The misfortune continued on in major pork producing regions wherein:

On January 21, ASF was detected on live hogs in Guangdong Province.
On February 12, 2021, Xinjiang Production and Construction Corps was found to have ASF infected hogs.
On March 2, 2021, ASF case in live hogs was detected in Yunnan province.

Source: USDA

The bad news that implied potential supply shortages of pork transcended crucial implications on the pork prices of major exporting countries to China. Based on Tridge’s Data Analysis entitled “Canadian pork belly and spare rib prices doubled than last year”, the pork price in Canadian wholesale market in April increased by +111.48% for pork belly and +93.11% for ribs. Weekly pork prices of Spain and Germany have risen starting from March 2021 and remained on at a high point until April. Germany was previously banned from exporting pork to China in September 2020 after ASF contraction reports in the country. However, the potential resumption of Germany’s pork export to China is believed to have boosted its prices upwards. Anticipated recovery of the food service sector and businesses also contributed to increase in prices.

Contrary to the expected decline in the domestic pork prices in China, the price is expected to remain strong, at least until the country is able to contain the ASF infection. As protein substitutes of pork, beef and chicken are also experiencing an upward pressure on prices, this may cause a global inflation on protein sources.