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20

2022

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09

USMEF: Renewed Signs of Optimism for China's Seasonal Fall & Winter Pork Imports

Source:

USMEF

There are renewed signs of optimism for China's seasonal fall/winter 2022-23 pork imports, including the highest average live hog prices of the year, PRC government announcements of pork reserve releases, and data showing an uptick in trade.

 

Despite a large 53% (-1.76 million tons) YOY fall in Jan-July pork imports by China, hog carcass prices by major producers and exporters are higher than a year ago. Carcass values in late August were higher YOY in Mexico (+14%), Chile (+29%), the EU (+18%), Canada (+10%), Brazil (+6%), and the U.S. (+1%) and higher than most recent 5-year averages.

 

To be sure, mid-year trade data shows that average per-ton pork muscle cut export prices (for all destinations) were lower for the major exporters to China including the EU (-7%), Canada (-3%), and Brazil (-1%), with U.S. export values similar to year-ago levels.

 

One factor contributing to firm global hog carcass values despite a potential 3+ million-ton decline in the world pork trade this year is a forecasted drop in world pork output outside of China.

 

USDA estimates that global pork production - excluding China - will fall from 60.15 million tons in 2021 to 58.94 million tons this year, a 2% decline. Hog prices of major non-China producers & exporters during 2020 & 2021 - the years of outsized Chinese pork imports - stayed relatively stable, likely due to production increases in Brazil, the U.S. & the EU during the 2019 to 2021 period.

 

There are renewed signs of optimism for China's seasonal fall/winter 2022-23 pork imports, including the highest average live hog prices of the year (now +44% from Jan 1, 2022 levels), PRC government announcements of pork reserve releases, and data showing an uptick in trade.

 

Brazilian pork exports to China in August of 49K tons were the highest since last September, and during the week ending Sept 1, U.S. exporters reported the highest weekly volume of new muscle cut sales to China so far this year. Still, the big ASF-induced pork import activity of 2020 & 2021 is unlikely to be repeated this year or next, with USDA forecasting that Chinese pork production will increase 2% in 2023 after a 7% increase this year.