June 23, 2014

Porcine epidemic diarrhoea (PED) outbreaks in the United States and African swine fever (ASF) outbreaks in Europe are shifting global pork trade, bringing Brazil and other big pork producers into the spotlight.

US hog supplies have tightened as PED virus has spread to hog farms in 30 states and killed millions of piglets since it was first identified in the country in April 2013, causing hog prices to soar 50% so far this year. The high prices are prompting some buyers to turn to other markets. That could weigh on hog prices in the United States, which exports about one-fourth of its annual pork output.

US pork exports will fall by 190,000 tonnes to 2.2 million tonnes this year, according to an April forecast by the Agriculture Department. US exports were up 11% through April, fuelled in part by foreign buyers seeking to secure inventories amid fears that supplies will continue to tighten.

US exports to China dropped sharply in April, falling 13% on-year and 37% from March. The country, the world's largest consumer of pork, was the third-biggest importer of US pork in the year to April by volume.

Joel Haggard, senior vice president for Asia Pacific at the U.S. Meat Export Federation, said that China is particularly sensitive to export prices because of an oversupply of pork in the Asian nation this year, which has helped depress Chinese pork prices to multi-year lows.

In an earnings call in May, Smithfield Foods Inc., which was acquired by WH Group Ltd (formerly known as Shuanghui International Holdings Ltd), said its exports of muscle meat to China "diminished significantly" in the first quarter "because of the pricing relationships."

In Eastern Europe, the discovery of a few cases of African swine fever resulted in an outright ban on European Union pork imports by Russia in January. The ban prompted an EU complaint to the World Trade Organization. China has also banned pork imports from Poland.

With the outbreaks in the United States and Europe, Canadian pork exports rose 16% on-year in the first four months of 2014, with sales to China more than doubling from March to April. The USDA forecasts that Canadian pork exports will rise by 20,000 tonnes to 1.3 million tonnes this year, mostly to the US.

Brazil is forecast to increase exports by 55,000 tonnes to 675,000 tonnes, according to the USDA.