Livestock & Feed Bussiness Worldwide: June 2017
Upheaval in the world pork market
by Eric J. BROOKS
The world pork market has performed better than was expected. Thanks to stronger than expected demand from China and neighboring East Asian countries, top exporters exceeded the 2016 forecasts made a year ago by anywhere from several dozen to hundreds of thousands of tonnes.
At the same time, a world market once strongly dominated by North America is now having both its growth and quality standards dominated by European producers, namely Germany, Denmark and Spain. Coinciding with China and Mexico's rise into top pork importer ranks, the rising influence of European pork marks a new chapter in the pork market's evolution.
For buyers, the most important change has been the rise of China (2.3 million tonnes of 2017 imports) and Mexico (1.1 million tonnes) as top three world importers.
Along with stable Japan (1.35 million tonnes) and slower growing South Korea (0.65 million tonnes), they define the world pork market for imports.
Three million tonnes of Mexican and Chinese import demand did not even exist 17 years ago. If one must speak in generalities, it could be said that seventeen years of newly created Mexican pork import demand has been almost all supplied by America. 2 million tonnes of Chinese import demand that materialized over the past ten years has been mostly supplied by Europe, with Canada and Brazil enjoying smaller but expanding volumes.
Growing Asian and Mexican markets coincide with the changing fortunes of top world pork exporters. In chapter one spanning the mid-1990s through to the mid-2000s, Canadian pork exports leveraged a highly undervalued Canadian dollar. Rising from 0.37 million tonnes in 1995 to 1.08 million tonnes in 2005, Canada exported more pork than any other nation during this time.
Although the EU collectively exported more pork even at this time, unlike North American producers, its exports were flat. Canada, America and Brazil took advantage of booming world market demand.
The next chapter took place from the early to late 2000s, when a rising Canadian dollar stopped its pork export growth. Even when the dollar returned to lower levels during our current decade, Canadian pork was unable to expand its presence on the world market. In short, Canada's inability to generate sufficiently profitable swine farming returns resulted in stagnant Canadian inventories.
As Canada's export surge levelled out, the years from 2003 through 2012 saw US pork exports roughly triple, from 0.78 million tonnes to 2.4 million tonnes. Even so, except during our current 2017 marketing year, US pork exports levelled out in the 2.3 to 2.4 million tonne range thereafter, becoming highly dependent on just one export market during this time.
Thereafter, America's PEDv epidemic coincided with the Euro's devaluation and stagnant European pork consumption. Around this time, Russia's embargo on western meat prompted it to substitute several hundred thousand tonnes of Brazilian pork in place of supplies previously imported from Europe.
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