“China’s Latest Battle With African Swine Fever to Push Up Prices,” by Hallie Gu. Bloomberg News (March 17, 2023).

Source: Keith Good University of Illinois
 

Earlier this week, Reuters writer Dominique Patton reported that, “A surge in African swine fever infections in China is set to reduce hog output later this year, farm managers and analysts said this week, pushing up prices in the world’s top pork consumer as demand recovers.

“The incurable disease has plagued China for years, with an initial wave during 2018 and 2019 killing millions of pigs and leading to a dramatic decline in meat output that roiled global markets.”

Patton noted that, “Infections this year began to surge relatively late in the season, around the Lunar New Year holiday in January, when millions of people travelled after China had relaxed its COVID curbs, said three managers at pig farming companies and analysts.

“‘Data from swine fever virus testing companies show that the number of positive detections exploded after the new year holiday. The order of magnitude in a single month has reached the level of the whole year of 2022,’ said analysts at Huachuang Securities in a report on Monday.

“‘We guess that the current swine fever infection area in northern production areas may be reaching 50%,’ it added.”

The Reuters article indicated that, “The disease outbreaks, as well as the prior herd reductions, will lead to fewer hogs reaching the market when demand improves in the second half of the year, said the Huachuang report.”

Also this week, Bloomberg writer Hallie Gu reported that, “China is battling a resurgence of African swine fever, the deadly disease that’s previously wiped out almost half of its hogs, potentially pushing up prices for the country’s most popular meat.”

 

The Bloomberg article pointed out that, “The outbreak was pretty severe in January and February, especially in the northern producing regions, and some areas are still battling the disease, said Pan Chenjun, a senior analyst at Rabobank. She estimates that the latest wave has affected 10% of the nationwide sow herd, which controls hog production, leading to higher prices in the coming months.”

“The impact of the latest outbreak will take a while to filter through to the market. For now, hog prices are weak on speculation that farmers are rushing their hogs for slaughter due to worries over the disease’s spread. Meanwhile, piglet prices have jumped about 20% so far this year as supplies tighten,” the article said.

Meanwhile, Reuters writer Tom Polansek reported yesterday that, “Chicago Mercantile Exchange lean hog futures sank by the maximum daily trading limit on Thursday on rumors about a potential outbreak of a fatal pig disease which the U.S. government later said were untrue.

Unsubstantiated chatter about a U.S. case of African swine fever swirled in the market, but the U.S. Department of Agriculture told Reuters it was a rumor and the agency had not heard anything about even a suspected case.

In its monthly Livestock, Dairy, and Poultry Outlook report earlier this week, the USDA’s Economic Research Service (ERS) indicated that, “January 2023 pork exports were 556 million pounds, about 9 percent greater than those of a year ago.

“Exports for 2023 are forecast at almost 6.4 billion pounds, about the same as in 2022.”

Mercedes Vega, General Director for Spain, Italy & Portugal

At the beginning of the year, looking at how our market was going, we observe that the prices were rising, but the truth is that we did not think that it could reach 2 € and here we are. In this week’s market, the price closed at 1.97€/kg live weight and we assume that this limit will be surpassed, a barrier that we would have considered impossible a year ago. This is due to the sharp decline in supply throughout the EU.

Source Mercolleida

Also, in the rest of the EU, prices have been increasing significantly as a result of the decrease in herd sizes. As of November 2022, there has been a decrease of -6% in total and -6% in sows. This represents almost 650,000 fewer sows in one year in the EU, with the loss of census in Germany and Denmark being more than -10%. In Spain the decrease has been -1%. The number of sows in Spain has not decreased significantly, but the sector is being restructured and production is concentrated in larger companies.

Source Mercolleida

According to data from Mercolleida, the drop in slaughterings in Spain has been 5% in January and in February it is expected to be about 10%. There is less supply, but the processing plants have the same capacity and need a minimum to maintain their structures and consequently costs. This has led to the import of live pigs from Northern Europe, the Netherlands and Belgium.

Because of this lack of pigs, piglet imports have shot up (between 25 to 30%), increasing the demand and consequently, the price of piglets has risen. With the decrease of the census in Holland and Denmark, which were the suppliers of the EU, there is a lack of piglets to fill the fattening farms.

Source Mercolleida

Raw materials prices remain high but this increase in the selling price is increasing the profit margin.

Source SIP Consultors

It is difficult to predict how the market will evolve, the meat industry has been able to pass on the price increase to meat, but we do not know to what extent the consumer will be able/willing to pay this higher price.

The EU and Thailand announced the relaunch of negotiations for a free trade agreement (FTA), with sustainability at its core. This announcement paves the way for deeper trade ties with the second largest economy in South-East Asia and further strengthening the EU's strategic engagement with this burgeoning region.

The aim of the FTA will be to boost trade and investment by addressing a wide range of issues such as: market access for goods, services, investment and government procurement; swift and effective Sanitary and Phyto-Sanitary procedures; the protection of intellectual property rights including Geographical Indications, and the removal of obstacles to digital trade and trade in energy and raw materials, thereby supporting the digital and green transitions. Sustainability will also be at the heart of this agreement, with robust and enforceable disciplines on Trade and Sustainable Development (TSD). These will be in line with the Commission's TSD review Communication of June 2022, supporting high levels of protection for workers' rights, for the environment, and the achievement of ambitious climate goals.

The EU and Thailand are committed to advancing swiftly in the FTA talks and aim to hold a first substantive round of negotiations in the coming months. The EU text proposals will be published after the first negotiating round.

March 15, 2023/ European Commission/ European Union.
https://ec.europa.eu

The total number of domestic pig outbreaks in Germany rises to 8 after confirmation of African swine fever on a farm in Brandenburg. In fact, authorities have confirmed that the death of two pigs in eastern Germany late last month was also due to African swine fever: the animals belonged to an 11-head backyard herd in the Cottbus city district, according to the Brandenburg state government.

According to the German authorities’ timeline, three outbreaks occurred among domestic pigs in Brandenburg in July 2021; these were followed by another outbreak on a farm 12 months later. The cases were located in three different districts of the state. In the past 10 days, veterinary authorities in six European states have registered new cases of Psa in wild boars with the Woah, World organization for animal health: from Poland (134), to Italy (65), Hungary (54), North Macedonia (15), Romania (8) and Latvia (1).

The latest outbreak brings to eight the number of confirmed cases of psa in domestic pigs in Germany since 2021: in addition to the five locations in Brandenburg, cases have occurred on a farm in each of the states of Mecklenburg-Western Pomerania and Lower Saxony and on a backyard farm in Baden-Wurttemberg. Just a week before the latest pig outbreak, the first cases of swine fever were reported in the city district of Cottbus: all of these cases involved wild boars.

According to the latest update of the European Commission’s Animal Disease Information System, six European countries recorded one or more outbreaks of plague among farmed pigs in 2023: along with Germany, Ukraine also confirmed its first outbreak in 2023. Romania has recorded the largest number of outbreaks, with 43 so far this year; Serbia’s total is 11 and Moldova’s is 10.

This year, the total number of Psa outbreaks in Europe has reached 2,212 cases: sixteen countries have recorded one or more outbreaks since Jan. 1. Among the nations reporting more cases in this population are Poland (747 outbreaks so far), Germany (408), Italy (195), Slovakia (175), Hungary (159) and Romania (147). Also reporting new psa outbreaks to the community system since the previous update on Feb. 18 are the Czech Republic, Estonia, Latvia, Lithuania, northern Macedonia and Serbia.

• Globally, pork production is expected to reach 126.2 million tons (Mt) in 2031, representing a growth of 13.4% over the estimated total production in 2022.

• Between 2022 and 2031, beef and poultry meat production are expected to grow by 12.5% and 18.4%, with volumes reaching 82.4 and 154.9 Mt, respectively.

• Compared to the other proteins, pork should grow at a higher rate than beef, although it will be outpaced by growth in poultry production.

• For Brazil and Mexico, volumes are projected to reach 5.4 Mt and 1.9 Mt in 2031, representing growth of 20.8% and 24.7%, respectively, compared to 2022.

333 Latin America with data from The United States Department of Agriculture (USDA).

Australian pork production is forecast to decline 3% in 2023 to 425,000 MT after stronger-than-expected production in 2022. Pork producers in early 2023 are being challenged by high feed grain prices relative to pork prices which is anticipated to have an impact on slaughter numbers and pork production in the latter part of 2023.

Pork consumption is forecast to decline slightly in 2023 to 630,000 MT (CWE). Consumption in 2022 was the highest on record at an estimated 642,000 MT (CWE) but may in part be related to importers taking advantage of lower prices of EU pork than the previous year. Analysts anticipate imported EU pork prices to be higher in 2023 which could dampen Australia’s enthusiasm for pork imports in the forecast year.

Australia imports over a third of its pork needs, and for 2023 imports are forecast to remain stable at 240,000 MT (CWE). Exports, which are very low at only around 8% percent of production, are also expected to remain stable in 2023 at 35,000 MT (CWE).

March 7, 2023/ USDA/ United States.
https://apps.fas.usda.gov