Optimism cools for pork exports to China

Kent Bang

Despite a fall in pork production in China and Hong Kong, the USDA expects consumption to fall by 10% in 2019 and an additional 19% in 2020.

I spent some time this week reading and analyzing the USDA report Livestock and Poultry: World Markets and Trade. This latest release covers major global meat producers and consumers and makes estimates on trade.

Pork production in China is now estimated to be down 7.585 million metric tons (14%) in 2019 and down an additional 10.529 MMT (23%) in 2020. Surprising to me, based on their estimates of domestic consumption in China and Hong Kong, the USDA expects consumption to fall by 5.459 MMT (10%) in 2019 and an additional 9.434 MMT (19%) in 2020.

The pork shortfall in China, based on the USDA numbers looks like this (Million Metric Tons):

While the number metric million tons of pork have increased based on USDA numbers, the imported pork demand from China falls short

While they are big numbers and increasing by threefold over two years is huge, it falls short of what I anticipated for imported pork demand. The total increase from 2018 to 2020 would be 2.119 million metric tons (equivalent to 22.3 million head at 210 pound carcass weight).

Global export volume growth is projected to be supplied by the European Union (967,000 metric tons), the United States (556,000 metric tons), Brazil (270,000 metric tons) and Canada (69,000 metric tons). The estimate of U.S. pork export growth of 21% over two years is concerning. That would leave us with an estimated 4.3% more pork to consume domestically over the two years (2019 and 2020).

These estimates come from a few sources. Canada is exporting more to China after removing export restrictions in late 2019. Mexico’s weak economy is slowing gains in pork consumption. In the Phillipines, we’re seeing lower than expected losses from ASF. Most importantly, Chinese pork production has been revised higher on much heavier carcass weights, and to a lesser extent, slaughter numbers.

China’s meat consumption will be lower and demand will be curtailed due to availability and price. USDA estimates that consumption of pork will be lower by 18.114 MMT (-33.4%) and offset by increased chicken consumption of 3.525 MMT (+30.4%) and increased beef consumption of 1.24 MMT (+61.9%). Fish consumption is not covered here and will likely see increases as well. Our need is to make sure that we are doing what we can as the pork industry to promote U.S. pork in China and capitalize on our global leadership in quality and price in order to capture additional market share in that region.

Bang is the vice president of swine lending at Compeer Financial