The two biggest market developments in oilseeds over the past 15 years have been China’s voracious demand for soybeans and the expansion of soybean production in South America to feed it.
China’s imports account for 60 percent of world soybean trade, and it buys the beans mostly for the meal to feed its growing hog herd.
China’s hog and pork statistics are staggering.
The country is the world’s top producer and consumer of pork.
Chinese people on a per capita basis eat twice as much pork as Canadians.
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Its pork consumption totalled 57 million tonnes in 2014, which accounts for more than half of the global pork consumption.
However, its industry has been undergoing a sea change as production switches from small family units to big corporate operations.
There was a big expansion in recent years, but then producers ran into trouble as the industry over-expanded.
Profits plunged with high feed prices, blows to demand following food safety scares and a new government push to enforce environmental regulations.
The number of hogs in inventory at the end of June was 417 million, down 48 million from six months earlier.
To put that into context, Canada’s hog herd is slightly more than 13 million head, so just the six-month decline in China was three and a half times Canada’s entire herd.
Sow inventory is down 15 percent year on year.
Given that decline, it is amazing that they are still importing vast quantities of soybeans.
However, the hog numbers are down enough now that prices are starting to recover.
The China Daily website reports that pork prices are up about 16 percent since April, and more price increases are expected.
The hog shortage in China could be good news for Canadian and American hog producers.
North American hog prices hit record levels last year because of the toll that porcine epidemic diarrhea took on American piglets, but they are now falling because producers brought the disease under control much quicker than expected.
Producers had over-bred on the expectation that the disease would still be killing a significant percentage of piglets. As well, they pushed carcass weights higher to make up for the expected shortage.
However, with the disease now controlled, it has led to overproduction in the U.S.
It would be good if more of the excess pork could be shipped to China to address the country’s growing shortage.
However, both the United States and Canada have sharply lower pork exports to China in the first five months of the year, down about 50 percent.
The strong American dollar discourages exports, and there are restrictions on American pork shipments to China because of the use of ractopamine
In the U.S. Pork Checkoff Report newsletter, National Pork Board chief Chris Hodges said the ractopamine issue has become critical.
“It is the consensus of the pork board that producers who are interested in and able to adjust their production should consider working directly with their packer to take advantage of this opportunity.”
The Canadian Pork Council has already worked with the Canadian Food Inspection Agency to develop a ractopamine-free pork certification program, which ensures the drug isn’t present in any stage of the supply chain, from feed manufacturers to finishing barns to processing plants.
