W47 Pork Update: Steady Global Pork Production Expected in 2024 While Pork Prices Fall in China Amidst Oversupply and Weak Demand

Global Pork Production Expected to Steady in 2024 at 115.5 mmt

The United States Department of Agriculture (USDA) expects global pork production to remain relatively stable at 115.5 million metric tons (mmt) in 2024. Pork production declines, particularly in the European Union (EU) and China, are expected to be offset by marginal increases in Brazil, Vietnam, and the United States (US).

US pork production is projected to see a 2% increase in 2024 compared to 2023, primarily attributed to a notable rise in the number of pigs produced per litter. Lower feed costs will also contribute, enhancing the competitiveness of pork prices against other meats. The USDA forecasts a 3% year-on-year (YoY) growth in US pork exports for 2024, driven by robust demand from Canada, the Philippines, and South Korea. Brazil and Vietnam are anticipated to witness a 5% YoY increase in pork production in 2024, driven by heightened domestic demand stemming from the economic recovery post-pandemic.

China's pork production is predicted to decline by 1% YoY, reflecting weak domestic demand throughout much of 2023. This could be attributed to China's recent economic challenges, making pork less affordable for some households. However, recent reports suggest faster-than-expected growth in China's economy, with gains in consumption and industrial activity indicating a potential recovery.

EU Pork Production to Drop 6.6% YoY in 2023: Poland Case Study

The expected reduction in the pig population across European countries is anticipated to lead to a significant 6.6% YoY decline in pork production within the EU in 2023, totaling 20.8 mmt. This downward production trend is attributed to diminished profitability in breeding operations and the prevalent impact of African swine fever (ASF). In Poland, the pig population reached 9.44 million heads as of Jun-23, a 1.8% decrease compared to Jun-22. Notably, the number of fattening pigs saw a decline of 4.8% to 3.95 million heads, breeding pigs decreased by 2.6% to 601 thousand heads, and piglets experienced a marginal 0.2% reduction to 2.02 million heads. However, the number of weaners increased by 1.5% to 2.87 million heads. The consequence of this reduced pig population in Poland is evident in the decline of pig slaughter and livestock supplies to purchasers. From Jan-23 to Aug-23, industrial pig slaughter amounted to nearly 1.5 mmt in live weight, a 5% decrease compared to the corresponding period in 2022. Concurrently, in the Jan-23 to Sep-23 period, over 1 mmt was supplied to purchasing entities, a 3% reduction from 2022's 1.5 mmt of live pigs.

Pork Prices Drop in China Due to Oversupply and Weak Consumption

China's sow population remained disproportionately high at 42.1 million heads at the end of Oct-23. This has led to an oversupply of live pigs and downward price pressures. Despite a slight reduction in the number of breeding sows from Sep-23, the excess production capacity persists, driven by an elevated reproduction rate and reduced pork consumption. The prevailing prices, marked by a significant 42% decline compared to the previous year, underscore the market imbalance. As a result, the Ministry of Agriculture and Rural Affairs aims to implement stabilizing support policies to align production with more rational levels.

China plans to purchase pork for the third time to increase national reserves, aimed at boosting sluggish pig prices. China's National Bureau of Statistics (NBS) reported that the consumer price index (CPI) experienced a 0.2% decrease in Oct-23 compared to the same period in 2022. The decline is attributable to food price drops, particularly pork, which has seen a 30% YoY fall. Pork prices in China witnessed a 0.7% decline in the first half of Nov-23 alone. Given pork's fundamental role in Chinese cuisine, the oversupply situation prompted China to conduct two rounds of pork reserve purchases to stabilize the market.

A previous surge in pork prices in Jul-23 following the National Development and Reform Commission’s (NDRC) announcement to increase meat reserves was short-lived, with prices declining again by early Aug-23. This ongoing struggle impacts millions of pig farmers in China, from smallholders to large enterprises, who are grappling with profitability challenges. Pork consumption typically rises during winter months as people prepare for events and festivals. However, experts are anticipating weaker demand in 2023 than usual.