African Swine Fever: How Will Uncertainty in China Play Out for Exports?
A new variant of African swine fever (ASF) in China has analysts weighing a range of scenarios that could play out in the year ahead.
“Impacts are ongoing, but a large-scale re-break would change the scenarios for both U.S. exports of pork and also alter potential feed demand from China,” says Len Steiner of Steiner Consulting Group in Manchester, N.H.
Although Chinese reports indicated that the swine herd would be fully restored later this year, the discovery of new ASF variants and rising outbreaks could alter the U.S. pork export numbers from where they were expected a few months ago, Steiner says.
If the reports are true – or even partially true – about recent losses to the Chinese sow herd, Steiner says it’s worth thinking about how this will impact the balance sheets in 2021.
He points out that new outbreaks often trigger increases in hog slaughter as producers try to get pigs to market ahead of disease spread. This could adjust the timing of U.S. pork imports.
On March 8, USDA Foreign Agricultural Service (FAS) released a GAIN report that did not raise newfound concerns for substantial changes to China’s pork balance sheet, Steiner says. USDA estimates pork imports into China in total (from all countries) dropping 15% in 2021 as compared to 2020 as a result of China’s increased domestic pork production. In the meantime, pork consumption is also expected to increase.
“The number put forward of 7-8 million sows is a large first cut and one that the industry will likely continue to watch, but it will be difficult as it has been in the past to fully understand the disease scope and culling in real time,” Steiner says.
Major changes in the size of China’s swine herd will also impact Chinese feed grain demand. U.S. corn and soybean prices have been surging on tight supplies ahead of a potential record-high South American crop and U.S. new planting season, Steiner reports.
“With only five months left to the current U.S. crop year, there many not be any immediate ASF-related adjustments. For now, the crop market will be more overshadowed by the supply side,” he says.
Steiner believes the news of increased ASF challenges and uncertainty around the official numbers are ahead of many of the USDA reports.
“Livestock Marketing Information Center’s pork export expectations are similar to a year ago – still very large exports of U.S. pork and have not been revised in light of ASF numbers as the uncertainty is being balanced against a strong January export figure, and the ASF situation in Europe and Southeast Asia,” Steiner adds.
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