CME: China Top Dog in the Pork World

by 5m Editor
5 August 2009, at 10:47am

US - CME's Daily Livestock Report for 4 August by Steve Meyer and Len Steiner reports that, given the impact that pork exports or, more accurately, the lack of pork exports have had on the US and Canadian hog markets this year, it might be useful to put these two countries' pork businesses into a world perspective.

The charts below are based on data from USDA’s Foreign Agricultural Service. Its very user-friendly PS&D (Production, Supply and Distribution) on-line system can be accessed accessed by clicking here. Just click on ‘Perform a Custom Query’ to get access to data that includes most agricultural products and countries, their outputs and demands as well as trade information. The system can virtually bury you in numbers!

If there is one clear lesson from both of these charts, it is that in the pork world, China is the big dog and virtually everyone else is part of the tail! China has nearly three times as many pigs as second-place EU-27 and produces over twice as much pork. China has nearly seven times as many pigs as third-place United States and produces nearly five times as much pork. The increase in China’s pig herd and pork production from 2008 to 2009 is larger than the total 1 January 2009 inventory and total 2009 production of all but three competitors: EU-27, US and Brazil. China’s 2009 increases will be larger than the totals for Russia and Canada!

Some readers may be thinking "Yes, but those data from China are notoriously shaky." That is true but FAS works hard to corroborate the Chinese data with other sources and the input of attaches and others. And regardless of the historical issues, these are the numbers we have for now and are the numbers that we will use at least until FAS updates its data in October.

Another item that jumps out is that the two countries that have caused the most problems with their trade policy decisions this year, China and Russia, are also the two countries that are growing the fastest. They are also among just four countries (with Brazil and Japan) that are increasing hog numbers this year and 5 countries (with Canada, the Philippines and Belarus) that are increasing pork production. It is possible that Belarus is increasing hog numbers as well but the last inventory data that FAS has for that country is for 2007. Higher pig numbers and pork output has pushed Chinese pig prices sharply lower this year and the government is no doubt trying to protect producers to encourage the rebuilding of breeding herds which, according to FAS, fell by six per cent in 2006. Russia has now cleared US pork from almost all states for (and all important porkproducing states) for importation but its interest in protecting its growing domestic business is clear.

Note also that FAS provides pork production data for far more countries than it provides hog inventories, pig crop, sow herd size, and slaughter data. When asked about the difference, a FAS contact said they had dropped countries with a "low level of significance" from the inventory data. We’re not sure how Vietnam and the Philippines are of low significance as the seventh and ninth largest pork producing countries. And that question becomes even more pertinent considering the close beef trade ties that exist between Vietnam and China.