African Swine Fever (ASF) was weighing on Chinese pork prices as Chinese New Year approaches.
Demand generally peaks in China during the New Year, but high inventories of pork meat and declining consumption amid the ASF spread mean prices remain weak, according to Rabobank’s latest China Food and Agribusiness Monthly.
It was also expected to have a profound impact on feed and livestock farming in the medium term.
Pork meat storage would likely drive prices down further in the coming months. However, due to culling and herd liquidation in 2018, Rabobank expected supply to tighten in the second quarter and pork prices to soar after that.
The continued spread of ASF, consumer reaction and Government policy adjustments on transport restrictions were the areas to watch to see what would influence markets.
In 2019, declining pig numbers were expected to limit feed grade consumption.
Rabobank predicted the epidemic would speed up Chinese feed industry consolidation and increasingly force small-scale farms to exit the market.
As a result, a rise in commercial feed usage can be expected.
Ongoing US-China trade negotiations could have a big effect on domestic feed corn usage.
If both parties reach agreement, China may import large quantities of US grains.
Larger imports would substitute domestic corn in feed rations, as state reserves of corn are likely to continue dropping in 2019, while commercial stock, held by traders and processors, will be relatively stable.
With the Government removing import tariffs on alternatives from January 1, China could import more alternative meals as a substitute to soymeal to offset potential supply shortages, should China and the US not reach an agreement.