November 7, 2017


China pork imports seen to rebound in 4th quarter

China's declining pork imports have been a recurrent theme in the first three quarters, but they're expected to rebound this fourth quarter, according to the latest pork quarterly report of agricultural lender Rabobank.


"The most significant story in global pork markets has been the substantial decline in China's imports in recent months, which creates a risk of over-supplied global markets," said Chenjun Pan, RaboResearch senior analyst–Animal Protein.


"However, we do expect China's imports to pick up somewhat over the rest of the year", she added.


China's pork imports in the first eight months were down 27%.


China's pork farming structure has been impacted by stricter environmental policy enforcement. Despite the exit of many small farms, Rabobank maintained its forecast of 2% increase in production for 2017.


"Prices will continue the downward trend, after holding at strong levels in summer", Rabobank said.


The report said that in the fourth quarter, global pork supply is expected to increase further, mainly driven by an import rebound in China, as well as by demands in the US, Canada and Brazil.


EU, US, Brazil markets


The Rabobank Five-Nation Hog Price Index suggests a stronger pricing trend, and the major importing countries will likely maintain steady import growth.


The report also noted the continued decline in the EU pork exports due in part to high prices in the first quarter, which reduced the EU's competitiveness in trade flows.


However, the high prices also triggered an expansion in the EU sow herd. Thus, the slight dip in production in 2017 is likely to reverse in 2018, with the EU seeking export opportunities for the additional production.


In the US, pork production is forecast to continue expanding over the remainder of the year. Prices are expected to soften under supply pressure. The report said that strong currencies would also put extra pressure on the export business.


Rabobank expects the US's total exports for 2017 to be higher than in 2016 despite weaker demand from China, which is offset by stronger demand from Mexico.


Brazilian pork exports were also affected by the slowdown in Chinese pork imports, as they declined around 4%, although in terms of value they increased around 18% in the first nine months of the year.


The report said that Brazilian pork production should continue rising in the fourth quarter, given favourable feed costs.-Rick Alberto