February 1, 2016

 

China's growing imports to fuel pork trade

 

 

China's pork imports are expected to further increase this year following a strong rise in 2015, the Rabobank first-quarter 2016 report on global pork said.

 

The agricultural lender's report said the continued rise in imports is due to the low levels of sow and hog inventories, which are expected to remain so this year as the government imposes stricter environmental policies causing the departure of many small producers.

 

Last year China's pork imports rose 38% from 2014 to 777,500 tonnes, of which 580,100 tonnes, or almost three quarters of the total, were from the EU.

 

The level of China's imports and relative competitiveness of major exporters is a major dynamic in 2016, Rabobank said.

 

Rabobank said European countries are expected to further increase export to China in 2016 given the depreciation of the euro and sufficient supply.

 

It added the US is also expected to increase shipment to China in 2016 after several plants were relisted for export, but that the strong US dollar would limit the upside.

 

Taking advantage of strong dollar

 

The report said Brazil, besides the EU, is in the best position to take advantage of the strengthening of the US dollar and the current devaluation of the Brazilian real against the dollar.

 

"Recent positive demand and price developments in importing countries will start to support prices in exporting countries during Q1", said Albert Vernooij, analyst for Animal Protein at Rabobank.

 

In addition to China's pork imports, two specific developments could influence pork trade in 2016, according to the Rabobank report. These are the Trans-Pacific Partnership (TPP) and Brazil's expansion of trade access for pork.

 

The TPP would reduce trade barriers and tariffs in the 12 signatory nations and could assist pork importers and exporters such as Canada, Japan, Mexico and the US.

 

Brazil recently gained access for its pork to South Korea. Also, two more plants were recently cleared to export to China, increasing access to this major market.