Unexpectedly high slaughter numbers in China in the first half of the year have strongly driven pork production and led to a sharp price decline and negative results. This also resulted in lower Chinese imports, according to the third-quarter Pork Quarterly report from RaboResearch.
The Rabo experts expect that global production will remain 10 to 20 percent below the record level of 2020 this year. This will lead to a redistribution of pork trade on the world market and may exert downward pressure on meat prices in exporting regions,” the report states.
Pork production in China showed strong growth as a result of liquidations and oversized pigs. African swine fever (ASF) continues to spread, still causing ongoing cullings. The growth in demand is lagging behind the growth in supply, which is reflected in sharp price declines.
Supply to Chinese slaughterhouses has slowed, partly because pig farmers have suffered significant losses. Due to culling of sows, Rabobank experts expect slaughter to slow further in the third quarter and prices to rise. The large Chinese stock of frozen pork will somewhat limit price movements.
Europe recorded strong production growth of 5% in the first four months of this year by working through backlogs at slaughterhouses and higher slaughter weights.
However, high feed costs and declining exports will limit production growth in the coming quarter in the EU. Exports to China slightly declined in April, compensated by strong shipments to Vietnam and the Philippines.
After reaching record highs in mid-June, pig prices in the United States are lower and stabilizing due to strong demand and lower production. Pork production in Brazil started the year at a good pace, thanks to the positive results from 2020 (mainly in exports), according to the Rabo quarterly report.