China's pork imports to peak in 2022, driven by fatal swine fever -consultancy

Seaboard

06/11/2019 20:00

By Tom Polansek
    CHICAGO, Nov 6 (Reuters) - Global meat shippers have three
years to make the most of the outbreak of a fatal pig disease in
China before Chinese pork imports peak, according to a report
released by the U.S. pork industry, which is competing for sales
against Europe and South America.
    The forecast issued on Wednesday starts a clock ticking for
companies to profit from the epidemic of African swine fever
(ASF), which has killed up to half of China's hog herd since
August 2018 and pushed Chinese pork prices to record
highs. urn:newsml:reuters.com:*:nL2N27921A
    China's pork imports will top out in 2022, before declining
as domestic production recovers from the disease, according to
the report that food consultancy Gira prepared for the U.S. pork
industry. Import volumes will stay high through 2025, but prices
will ease, Gira said. 
    "This will be a very different period to the 2019-21
distressed market opportunity," the report said.
    U.S.-based processors like Seaboard Corp  SEB.A  and
Smithfield Foods, a unit of WH Group Ltd  0288.HK , face a
disadvantage for sales, compared with other suppliers, because
Beijing imposed steep tariffs on U.S. pork as part of the
countries' trade war. urn:newsml:reuters.com:*:nL8N24A4RS
    Still, Smithfield  SFII.UL  retooled a U.S. slaughterhouse
to supply pig carcasses to China, the world's biggest pork
consumer, according to employees. Tyson Foods Inc  TSN.N  and
JBS USA  JBS.UL  are halting the use of a livestock drug banned
by Beijing. urn:newsml:reuters.com:*:nL2N2720R0
    Chinese processors need pork in the short term to keep
slaughterhouses running, said Jack Shao, international sales and
marketing manager for Hormel Foods Corp  HRL.N .
    "There is a huge void right now," Shao told reporters on a
conference call.
    China will likely recover from African swine fever by 2027,
but production will be 13% below where it was before the
country's first case was confirmed in 2018, according to Gira.
High pork prices as a result of the outbreak will change Chinese
diets over the long term, with some consumers switching to
cheaper chicken, the consultancy said.
    By 2040, China's pork imports are expected to fall back to
2017-2018 levels, according to the report.
    "As we come out the other side, the market left for pork
will be lower," said Rupert Claxton, Gira's meat director.
"We're looking at the market post ASF as being 80% of what it
was in 2018."
    Rabobank predicted in a separate report that U.S. pork
exports will climb 14% next year, but China's production will
start to rebound in 2021.

 (Reporting by Tom Polansek
Editing by Marguerita Choy)
 ((Thomas.Polansek@thomsonreuters.com; +1-312-408-8556; Twitter:
@tpolansek; Reuters Messaging:
thomas.polansek.thomsonreuters.com@reuters.net))