Comment: China lightens interest in pork imports but loads up on beef

Falling pork prices in China have quelled demand for imports

Higher pork production this year versus last year has eased China’s imports of its staple protein.

Reuters – U.S. pork trade with China made a big breakthrough two years ago as the Chinese hog herd was thinned by disease and political relations began to mend, though U.S. exports to the top pork consumer have not performed as well this year relative to those from other suppliers.

China’s pork production is expected to weaken in 2022 due to a smaller herd and low producer profits, and that is likely also to ease consumption as the gap will not be filled by imports.

The United States is China’s No. 2 pork supplier after Spain, but sales have slowed perhaps more than expected. China’s expanded affinity for U.S. beef is making up for at least some of that, driving those exports to record levels.

Pork prices in China in mid-September slid to the lowest levels since early 2019, when the global market first learned the severity of African swine fever (ASF) in China’s hogs. Those prices are more than 60 per cent off the year-ago ones, making profitability for producers very low or negative.

That is expected to limit next year’s pork output, which the U.S. Department of Agriculture’s Beijing office last month placed at 41.5 million tonnes. That would be down nearly 14 per cent from its estimate for this year and up 14 per cent from 2020, but well off the pre-ASF levels of around 54 million tonnes.

This has been of concern for global grain and oilseed traders because if China’s pork production declines, that could reduce its import demand for feed ingredients, especially if China has the record grain crops that are expected this year. However, that may be good news for meat exporters.

Higher pork production this year versus last has eased China’s imports of its staple protein. August imports totalled 280,000 tonnes, the lowest monthly volume in well over a year and down 21 per cent from August 2020. The January-August volume reached 2.93 million tonnes, up just one per cent from the same period last year, according to customs data.

May 2021 marked the first time in more than a year that China’s monthly pork imports were lower than in the same month a year earlier, and that gap versus 2020 has widened each month since.

China’s reliance on U.S. pork seems to be slipping more than its overall imports. Monthly U.S. pork exports to China have not been greater than in the prior year since November.

Through Sept. 9, China had purchased 361,454 tonnes of fresh, chilled or frozen muscle cuts of U.S. pork for export in 2021, and seven per cent still awaits shipment. Those commitments are down about 43 per cent from the same date in 2020 but up 29 per cent from 2019, and they represent 25 per cent of all 2021 U.S. sales.

Last year at this time, China accounted for 39 per cent of all U.S. pork sales and Mexico was second at 25 per cent, though Mexico leads in 2021 at 34 per cent as its purchases are up about 19 per cent on the year.

Through July, 2021 exports of U.S. pork and pork products to China were down 20 per cent from the same period a year ago. But both Europe’s and Brazil’s pork exports to China during this time were up from last year. The European Union accounts for about 60 per cent of China’s pork imports and Brazil is the No. 3 supplier.

U.S. exports of beef and beef products to China have greatly taken off in 2021, and USDA partially attributes this to Chinese consumers’ ability and willingness to pay more for what is considered a luxury protein.

Beijing in 2017 lifted a 14-year ban on U.S. beef, though the most noticeable impact on U.S. business has materialized this year. High domestic beef and pork prices have also driven recent growth in beef imports.

Sales of fresh, frozen or chilled U.S. beef to China totalled 130,319 tonnes as of Sept. 9, up nearly 400 per cent from a year ago and more than 20 times the 2019 volume to date. Those sales account for 15 per cent of sales to all buyers.

January-July U.S. beef exports to China topped 99,000 tonnes, accounting for 12 per cent of exports to all destinations versus 1.3 per cent in all of last year. So far in 2021, China is the No. 4 recipient of U.S. beef behind Japan, South Korea and Mexico, up from No. 8 in 2020 and No. 13 in 2019.

Beef’s priciness versus other meats makes those exports stand out in terms of dollar value. At US$773 million, U.S. beef exports to China in the first seven months of the year accounted for 4.5 per cent of all U.S. agricultural exports to the Asian country versus one per cent in full-year 2020.

That puts beef at No. 7 on the list so far this year. Corn was the top U.S. product to China between January and July, valued at US$4.1 billion, and soybeans placed second at US$3.6 billion.

South American countries as well as Australia and New Zealand also supply China with beef. USDA’s Beijing counterpart reports that the United States is seen as a premium-priced beef supplier providing consistent and standardized high-end cuts.

The agency predicts China’s 2022 beef imports will rise six per cent to a new record of 3.3 million tonnes. Next year’s pork imports are pegged at 5.1 million tonnes, slightly off the 2020 high.

About the author

Columnist/Reuters

Karen Braun is a Reuters market analyst based in Chicago. The views in this column are her own.

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