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Rabobank projects global pork stocks to decline in 2020 as ASF and coronavirus shocks take their toll

Global pork supplies are expected to decline by up to 10 percent in 2020 after a record fall in stock levels in 2019, according to new analysis from Rabobank.

5 March 2020, at 8:30am

Pork production in China, the world’s largest consumer, declined by over 20 percent in 2019 as African swine fever (ASF) impacted supplies. The bank still sees the disease as the biggest influence on supply levels globally, with the addition of coronavirus providing further volatility.

Amid a “four-pronged attack” on the market, Rabobank’s analysts forecast a further 15-20 percent decline in pork production in the country this year. Pork imports to China increased by 67 percent to make up for the shortfall in 2019, with Spain, Germany and the US the biggest exporters.

The report, African Swine Fever: A Global Update, states that four issues will determine output levels for the sector in 2020.

First, coronavirus, which will delay restocking of hogs lost to last year’s ASF outbreak. The bank forecasts this will now likely take until the second half of 2020 to pick up as labour levels and the movement of livestock return to normal.

China’s food services businesses and retailers are also being hit as firms close their doors as a result of coronavirus, suppressing demand and leaving consumption levels difficult to forecast.

The second comes in the form of the threat posed to pork supplies by the trade dispute between the US and China, despite its current truce. While this has so far led to an increase in US pork exports, its long-term evolution is much more unclear and is creating uncertainty in the wider market.

Third is the Chinese authorities’ management of domestic pork prices, which is further complicating the trade outlook. If prices are kept at their current level we could see production growth stall and trade soften, while consumers benefit from more affordable pork. If authorities allow prices to rise, we will likely see more aggressive re-stocking from pork suppliers, but at a less affordable price.

Finally, the ongoing threat of ASF spreading beyond Poland’s eastern borders and into Germany, Europe’s largest producer, is muddying the outlook throughout Europe.

Justin Sherrard, global strategist for animal protein at Rabobank, said: “We predicted last year that ASF would have an unprecedented impact on global meat supplies. Only now as the data filters through is the scale of the devastation clear.

“While the outlook for 2020 is slightly more upbeat, coronavirus is another match thrown into an already combustible mix. It makes for a four-pronged threat that will be keeping producers, traders and retailers awake at night. Stopping its spread remains the absolute priority.

“Many of the issues that initially impact Chinese producers will have wider-reaching effects on global supplies. Those in Europe, Southeast Asia and America will be monitoring further developments closely.”

Hog and pork prices reached record levels in 2019, dragging other meat prices up. Chinese imports of meat were above, or close to, record levels across all species.