Pork exports to China boomed in 2016 but slowed this year, although they remain on a long term rising trajectory.
Future demand from China and other export markets will continue to be a key market factor as North American hog herds grow and slaughter expands.
Forecasts indicate that while U.S. pork production should remain manageable in 2018, it could become burdensome in 2019, depressing prices.
Canada’s hog herd is the biggest since 2007 and the U.S. herd is at a record high.
To accommodate the additional pigs, two new U.S. plants opened Sept. 5 with a combined single shift capacity of about 22,000 head per day.
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However, the pork they produce will have to be sold somewhere.
A report by Steiner Consulting for the CME Group says U.S. pork production should be manageable through 2018, but it flags a worry for 2019.
The amount of pork that every American would have to consume to use up all the pork produced in 2019 would rise to about 51 pounds, the most since 2007.
The report suggests retail pork prices would have to fall to stimulate that much demand unless the U.S. can export a greater percentage of its production.
One export opportunity is China.
In 2015 it began a major three-year reform of its hog production sector, the largest in the world, to address pollution problems. It started eliminating small farm production, particularly in the south, and promoted new large operations, mostly in the north where much of the grain is produced.
During the transition, domestic hog production suffered. To fill the gap, pork imports doubled in 2016 to about 2.2 million tonnes.
Canada, with its ractomine-free status, did very well, seeing its exports of fresh and frozen pork rise 185 percent to $443.4 million year over year.
U.S. and European exporters also saw big shipments.
However, Chinese production is recovering and Canadian pork exports to the country are down 14 percent to the end of August. It is a similar story with American exports.
Still, China’s imports in coming years are expected to continue well above the normal levels of the early 2010s, according to a Rabobank forecast.
Chinese per capita pork consumption is already the biggest in the world. But like North Americans, members of the health conscious Chinese urban middle class think they need to eat more vegetables.
Rabobank forecasts that the annual compound growth in pork demand will slow to one percent from two.
However, one percent growth is still a lot when you consider China’s 1.3 billion consumers.
Although it will grow less rapidly, import demand should remain large.
The major pork exporters — the United States, Canada and Denmark — will compete strongly for it and Russia is gearing up to start supplying as well.
However, China is not the only gem in the pork export market.
Canada’s pork export value is up seven percent, even with reduced sales to China in 2017, thanks to increased sales to Japan, Mexico, South Korea, the Philippines and Taiwan.
Let’s hope further inroads can be made in those markets before the wave of U.S. pork hits in 2019.
