Big Pork Purchase Is Just a Taste of What China Needs to Buy

Christine McCracken#1
Rabobank says China will need to come to the U.S. to fill its need for protein, as the list of countries able to export is short. ( MGN )

USDA confirmed a large buy of pork from China this week. Of the 46,300 metric tons (MT) of exports sold, China bought 31,400 MT, the second-largest purchase even of U.S. pork. The growing hunger for pork this year is due to African swine fever (ASF) continuing to sweep the country, and the sale is just a taste of the amount of pork exports that could be coming in the next few months.

RaboBank’s protein analyst Christine McCracken describes the losses as “massive,” and larger than the entire U.S. hog production on an annual basis, which could create a historic protein shortage in China and Asia.

“Based on our analysis, we are looking at about a 16-million-metric-ton deficit,” said McCracken.

China can supplement the losses with other meat and protein sources, including chicken, duck, eggs and seafood, she said. However, even those sources can’t make up for the historic losses Asia is currently seeing.

“All of that, in a year-over-year basis, could only increase by about 4 million metric tons (MMT), so out of 16 MMT, adding back 4 MMT locally with other proteins, really leaves you still with a huge gap,” she said.

McCracken said the list of available countries to source the gap in protein supplies is short, which translates into a huge exporting opportunity for not just the U.S., but also Europe, Canada, Mexico and Brazil

“At the end of the day, if China wants additional protein supplies, they’re going to have to come to the U.S…. even with the tariffs,” said McCracken.

She said the reason is simple--the list of countries able to export enough pork to China is short.

“There aren’t a lot of options, and I think that’s a big part of why the U.S. should benefit,” said McCracken. “Europe is the largest exporter in the world, they have about double of what we have in terms of production.”

ASF has also hit Europe, a factor that could limit the EU’s ability to export to China and Asia.

“Brazil is sizeable, but a fraction of what we could export here in the U.S. Canada is a big exporter of pork, Mexico, as well. So, a number of countries around the world could export to China, but the list is pretty short, because beyond that, there’s not a lot of countries with available supply to the Chinese market, or even all of Asia,” McCracken said.

China will have to rely on protein imports from around the world, including pork, chicken and beef, but even those exportable supplies are limited, she added.

“We think right now we’re looking at a 3 to 4 MMT exportable base to China, which still leaves them short on protein,” said McCracken. “It’s a huge opportunity for producers in the U.S. to see some upside in prices, after a period of losses,” she said.

Related Links:

Will African Swine Fever Push Consumers to Alternative Proteins?

China’s Love of Pork May Not Be Enough