South Korean pork imports still building
Despite previous expectations that import demand could decline this year, South Korean pork imports were up 15% year-on-year for the first half of 2018, at 294,400 tonnes.
The unexpected import growth has perhaps been supported by inconsistent growth in domestic production. USDA forecasts had anticipated a 3% growth in South Korean pork production in 2018, and indeed for the year to June, slaughterings have been 4% higher year-on-year. However, after a strong performance in January, slaughterings since have actually been quite variable, and average only 2% above year earlier levels for February-June.
In contrast to the overall trend, imports of the traditionally popular belly cut actually declined 9% year-on-year. Bellies have typically made up nearly 30% of South Korean pork imports, however for the year to June, this market share had fallen to just under a quarter. The overa
ll import growth was therefore driven by imports of other cuts increasing by almost 25%. This might reflect changing consumer preferences in supplying countries, where bellies have been increasing in popularity, as well as declining demand in South Korea.
The US remained the dominant supplier of pork to South Korea, with volumes increasing by a third on year earlier levels to reach 107,600 tonnes. Germany and Spain also remained the second and third largest suppliers, shipping 56,200 tonnes and 36,700 tonnes respectively. However, while this was an 11% growth on 2017 levels for Spain, German shipments were actually back around 1%.
Looking forwards, it seems likely shipments from Spain and the US will continue to increase in the coming months. Spanish production has been growing rapidly this year, and with the Chinese market floundering, South Korea represents an important outlet for additional supply.
South Korea represents an increasingly important market for US pork too, which has been disadvantaged by the US trade war in the key markets of China and Mexico. US product also benefits from slightly more favourable access conditions in Korea, compared to the EU, due to the KORUS agreement. In addition, the ongoing barriers to US pork trade have caused prices to soften recently, and if this continues, lower prices should stimulate South Korean import demand as well. Competing with lower US prices could then mean there is downward pressure on prices from EU suppliers. How US trade talks develop in the coming weeks will therefore be key to the global pork outlook for the rest of this year.
Bethan Wilkins, Analyst
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