Business

The global pork market has been potentially busted-wide open

Once again the global pork market has come under the spotlight, thanks to the recent African swine fever (AFS) outbreak from Asian countries. After losing around 20% of its pork to AFS, China has been intensively rebuilding its pork herd size over the past few months and it almost succeeded until the latest AFS wave. Presently some provinces are reported to have lost between 20%-30% of pigs already, and the country is battling to contain the spread with neighbouring countries.

In China, pork it’s staple meat, and the country is reported to be stocking up to fill meat shortages. Some farmers are panicking and were reported to be slaughtering smaller pigs and imports were said to be 20.8% higher end of March 2021, when compared to the same time the previous year.

Also, the Philippines is battling with pork shortages following the AFS outbreak that has significantly reduced pork supply to feed its 109 million population. Following a surge in pork prices, government officials were forced to take measures to keep prices stable. On the 7th of April 2021, the government has decided to lower pork imports tariffs from 30% to 5% for the period between April 2021 and June 2021 for minimum access volume (MAV) of 404 210 MT, while a tariff of 15% will be applied to above MAV for the same period.  After June 2021, tariffs will be slightly increased to 10% and 20%, respectively for at least a year. The Philippines pork imports have increased by 11.4% between 2010 and 2020, and this will likely be even higher during the 2021 market year.

China’s efforts to rebuild its pork herd significantly affected the feed industry across the world. This meant countries that buy substantial quantities of grains and oilseeds, particularly soybean in the case of South Africa were importing these commodities at higher prices. This had also spilled over to consumers who paid high prices for most cereals, meat, and animal products such as dairy products and eggs, as observed in late 2020 and during the first months of 2021. This was in response to a surge in feed prices.

While this has potential implications for grains and oilseeds prices sooner or later when these countries rebuild their local pig population, it’s relatively early to draw a conclusive picture based on the current scenarios. An immediate solution for the Chinese, Philippines, and other countries battling the disease is to buy pork from other countries, thus an uptick in pork imports is inevitable. Unfortunately for countries such as South Africa, Germany, and other pork exporting countries, bans in exporting due to recent AFS outbreak status means no pork can be exported to these markets even though the pork meat has been declared to be consumable by humans, thus this market is presently out of reach.

This comes after a 2.3% increase in the global meat price index during March 2021 underpinned by pork and poultry prices attributed to imports from Asia, largely China, and a rise in sales in Europe for Easter preparations.

Already, news from the USA is that pork future prices are at 51 years high due to an anticipated increase in demand from China amid another AFS wave. As observed in recent months, a rise in demand for grain, soybean, and pork from China has huge implications for the global market. 

As things stand, the global meat prices remain elevated as indicated by the latest global meat index and the current situation has the potential to keep pork prices elevated in the short-to-medium term and the global demand for pork is very likely to rise.

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