CHICAGO, Ill. (Reuters) — China’s African swine fever outbreak is far more severe than previously thought and the full impact of the disease on animal feed producers has yet to be realized, Archer Daniels Midland Co. said last week.
The fatal pig disease has slashed China’s hog herd by as much as half since August 2018 and has already lifted margins for processing soybeans into animal feed, said Ray Young, ADM’s chief financial officer.
Millions of pigs have died from or been culled to control the disease in China and other Asian countries, such as Vietnam. China’s Ministry of Agriculture and Rural Affairs reported a new case of African swine fever on a farm in the southwestern province of Yunnan on Nov. 13, the day Young made his comments.
The spread of ASF in China has redrawn global food supply chains as the country has had to rely more on imported pork and less on domestic production.
That shift is reducing Chinese imports of raw soybeans, but ADM is expected to benefit as other countries expand livestock production to feed China. This boosts demand for ADM’s feed ingredients such as soymeal. ADM operates 45 oilseed crushing and origination plants in Europe and the Americas, but none in China.
Annual pork production in China has likely dropped by 20 million tonnes this year from ADM’s previous estimate of a 10-million-tonne decline, Young said.
“I think probably on a marginal basis, there’s been some positive impact. But the overall impact, we probably haven’t felt yet in terms of overall crush margins.”