China: Trade war outweighing ASF impact?
Despite widespread reports that Chinese pork production is lower in the first months of the year, increased import demand for pork that was anticipated has not materialised in the data for the first quarter of 2019. Although on-going problems with African Swine Fever (ASF) are well known, reported pig meat imports declined in the first quarter, driven by lower offal imports.
In the first quarter, pig meat imports (incl. offal) totalled 550,000 tonnes, an 8% decline (-46,000 tonnes) compared to the previous year. The US has recorded the largest decline in shipments over the quarter (-70,000 tonnes). This is most likely as a result of the on-going trade war, reducing US competitiveness in the area. Germany, another major supplier to the Chinese market, has also lost ground, exports were 9% lower than in 2018. Total shipments from the EU-28 declined almost 2% (-6,000 tonnes), to 362,000 tonnes. Although fresh/frozen pork imports have increased over the quarter as a whole, they appear to have dropped sharply in March.
Canada reduced the deficit caused by other suppliers, increasing shipments of total pig meat (incl. offal) by 19,000 tonnes in the first quarter, to total 87,000 tonnes. The United Kingdom also increased exports (+8,000 tonnes, +52%), as did The Netherlands (+6,100 tonnes, +14%) and Chile (+3,300 tonnes, +18.4%). Reuters recently announced that Argentina has gained access to China, and could encroach on trade for the major suppliers in 2019.
Looking back at historic Chinese trade data, it is clear to see that 2016 is a standout year in terms of imports. Since then, imports have been declining year-on-year but are still relatively high compared to pre-2016 levels. The first quarter of 2017 was highest first quarter of any year, following on from increased shipments in 2016. With ASF really starting to become problematic in China, time will tell whether imports reach the highs of 2016, or even go beyond.
Tom Forshaw, Analyst
Tom.Forshaw@ahdb.org.uk, 024 7647 8647