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Chinese pork imports seen doubling over two years by 2020

China expected to import less grain for hog feed in meantime

Sao Paulo | Reuters — Chinese pork meat imports are projected to sharply rise from 2.1 million tonnes in 2018 to 3.3 million tonnes in 2019 and 4.2 million tonnes in 2020, because of the African swine fever outbreak, broker and consultancy INTL FCStone said on Monday.

FCStone estimated during a commodities outlook conference in Sao Paulo that China’s pork meat production will fall to 38 million tonnes in 2019 from 54 million tonnes in 2018. It expects the production to fall further to 34 million tonnes in 2020, as the country will continue to struggle to control the devastating disease.

Renato Rasmussen, FCStone’s market intelligence director in Brazil, said that China could take up to seven years to return to production levels near 50 million tonnes per year, which will leave open a window of opportunity for meat exporters.

Besides rising imports of pork, he sees substitution of animal protein consumption in China, with increasing volumes of beef and poultry.

Rasmussen, who said the estimates released on Monday were prepared with data from FCStone analysts in China, expects the European Union and some other Asian countries such as Japan and South Korea to benefit from rising Chinese pork imports.

He said the sharp Chinese tariffs imposed on U.S. pork will likely limit American shipments.

China announced last week that it will impose an additional 10 per cent tariff over U.S. pork imports from Sept. 1, taking the total tariff to a staggering 72 per cent.

The analyst said Brazil could benefit from the situation, not only from higher pork exports but as well by shipping more beef and poultry.

“I believe beef trade could benefit the most, because it would be a more natural transition for Chinese consumers to opt for beef than poultry,” he told Reuters after his presentation.

Despite the opportunity for global meat exporters, grain producers could lose out since Chinese use of animal feed is expected to fall sharply.

FCStone projects that if swine meat production in China falls as much as 40 per cent, consumption of animal feed would fall by nearly 37 million tonnes per year. Corn use on animal feed could fall by 23 million tonnes, while soymeal use could fall by 10 million tonnes.

“China will overcome the situation, but it will take time. The country will have to completely modernize its pork production system,” Rasmussen said.

— Marcelo Teixeira reports on commodities for Reuters from Sao Paulo.

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