Although African swine fever (ASF) is the dominant issue impacting global animal protein, RaboBank says there’s no question novel coronavirus (COVID-19) is complicating the outlook further.
The number of new ASF cases in China may be declining, but in other parts of Asia, the disease is continuing to spread. In Europe, outbreaks in western Poland and Greece are raising alarm.
“The disease retains the potential to influence and disrupt production, trade and consumption throughout 2020,” Rabobank analysts said in African Swine Fever: A Global Update.
COVID-19 complications add further uncertainty and volatility into the market, as the disease takes its toll on production, distribution, consumption and trade in Q1 2020 for all livestock species.
COVID-19 disrupts pork market in China
“Wet market closures, roadblocks and labor absences disrupt feed supply and live hog transportation in Q1 2020,” RaboBank said. “Consumption is also adversely affected, and restocking is largely on hold.”
However, RaboBank said its base case is for the disease to be largely brought under control in Q1 and as a result, they expect short-term impacts on consumption, distribution, production and trade with a strong rebound in Q2.
“Pork appears to be the least-affected of the proteins, as the shift from foodservice consumption to food retail/home consumption is easiest,” Rabobank analysts said.
Pork exports to China on the rise
Although China’s No.1 document emphasizes the tasks of recovering hog production in 2020, the government continues to support hog production and pork supply, with policies that tend to favor medium to large players, the report noted.
This creates some challenges. The low sow inventory in 2019 and the practice of gilt retention for restocking has experts predicting slaughter numbers and pork production to decline even more in 2020. Chinese hog producers are also raising hogs to heavier weights, resulting in a meat supply 15% to 20% lower than 2019.
Because of this, exports to China are expected to continue to rise in 2020. Weekly U.S. pork exports to China were steady in early February, averaging 15,000 metric tons per week. However, RaboBank said uncertainty at the ports will disrupt product flow even though Chinese demand for U.S. pork remains strong.
In 2020, RaboBank predicts U.S. pork exports to China to increase by 40%.
With all the uncertainties in the near term, Rabobank maintains the view that China will maintain or increase its imports of all species in 2020. In short, RaboBank said, “The trade outlook remains as complicated as ever.”
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