The Rabobank Pork Quarterly Q3 2021 indicates several reasons behind the price plunge.
The analysts noted that, in the first four months of 2021, African swine fever (ASF) outbreaks related to a new variant led to herd liquidation in affected regions, causing a temporary supply surge. This was followed by the dumping of oversized hogs as farmers abandoned hope of a price rebound and rushed heavy hogs to slaughter, putting extra pressure on supply from April to June. Subsequent disease outbreaks in the south and southwest of China in late May caused a new round of liquidation in affected regions, they reported.
The sudden supply increase resulted in a sharp price decline and negative results in both farming and trading in 1H, with expected low pork imports by China in Q3.
“While we expect hog and pork prices to rebound in Q3, the estimated high frozen pork inventory will impose a lot of downward pressure on prices. We expect the slowdown of imports in the coming months will reduce full year imports from 2020’s record levels by 10% to 20%,” said Chenjun Pan, senior analyst, animal protein, Rabobank. “This will lead to a redistribution of pork trade in the global market and could place downward pressure on pork prices in exporting regions."
Price, availability, and freight costs remain important when considering the impact of softening demand from China, said the analyst.
Increased demand from other markets, such as the Philippines and Vietnam, can partially compensate for the potential decline in exports to China, noted Pan.
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July 29, 2021 at 09:15PM
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Weaker pork import demand from China expected as prices plunge, high feed costs challenge global sector - FeedNavigator.com
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