China's hog figures see a three-year decline which may drive pork imports to record levels for 2013.

 

USDA staff in Beijing ditched expectations of China's hog herd, which accounts for roughly half the world total, returning to growth this year, despite efforts by the government to support profitability, by for example buying pork for cold storage.

 

A drive to promote commercial pig farms, at the expense of inefficient backyard operations, face "difficulties with obtaining land," besides the tight grain supplies and higher grain prices testing peers worldwide, the USDA bureau said.

 

Furthermore, heavy flooding in July and August in major hog producing areas, including Sichuan, Hunan and parts of Guangdong "delayed feed delivery and caused producers to slaughter animals earlier than expected to avoid losses, despite lower weights".

 

As a further dent to domestic producers, who face particularly high domestic feed prices, their pork is more expensive than imported supplies.

 

"Reportedly, the import unit price for pork was 48% cheaper than domestic prices," the USDA bureau said.

 

Furthermore, food safety scares are boosting the appeal of foreign supplies, with Chinese buyers "switching to imported pork products because of constant reports of domestic food safety violation cases from well-known pork processing plants".

 

The numbers predict a drop of 11.2 million heads between the end of 2010 and the close of next year, in the first three-year run of declining herd numbers on records going back to the 1970s.

 

The drop in hog numbers bodes well for pork exports from the US, expected to pick up more than 40% of China's import orders next year, and shippers from EU countries, such as the UK, gaining increasing access to the world's biggest pork market.

 

The USDA bureau lifted to a record 799,000 tonnes its forecast for China's pork imports this year, enough to promote the country to the world's third-ranked buyer, after Japan and Russia.

 

Next year, China's imports will hit 840,000 tonnes.

 

However, the reduced need for feed implied by the herd forecasts may herald revisions to estimates for China's needs for corn and soy imports, purchased largely to feed hogs.

 

Rabobank forecast that China's corn imports could hit 20 million tonnes a year "within a five-year timeframe" if it can expand its pork production sufficient to avoid the need for exports.

 

"We hold the view that China has the potential to maintain self-sufficiency of pork supply in the long term," the bank said.

 

"However, there are many challenges in achieving this success, such as the continuation of disease problems, food safety issues, logistics and the lack of a cold chain."

 

Corn imports of 20 million tonnes would represent a huge uptick from the 2.0 million tonnes forecast for 2012-13, and likely place China as the world's top importer, ahead of Japan, which buys 15-16 million tonnes a year.