Fallout from China’s African swine fever outbreak continues to impact the global pork market. Last week, the USDA reported a record 78,000 tonnes of pork exports to China, despite China’s 62% import duty on pork products from the US. Year-to-date US export commitments of 142,000 tonnes have already matched the annual record for pork exports to China set in 2016.
Soybean meal is a prominent part of the hog feed ration, and the 78,000 tonnes of pork exports equate to approximately 1 million bushels of soybeans. While this recent surge is impressive in the context of the pork trade, it will need to be sustained in order to chip away at the soybean stock overhang. For the current marketing year, US soybean ending stocks are projected at a record high of 895 million bushels.
More than 100 outbreaks of swine fever have been reported in China since August 2018. In Shandong, one of northern China’s biggest producing regions, the sow herd has been reduced by over 40% since the outbreak began. Given the diffuse nature of China’s pork supply chain, even experts are having difficulty identifying the exact number of infections or herd reductions. The Chinese government is ramping up efforts to contain the disease outbreak, ordering inspections of all slaughter operations by May 1. However, pork demand remains very weak as consumers are concerned about product sourcing, despite no evidence of the disease being harmful to humans.
Another worrisome development is the spread of African swine fever to new regions. According to the latest situation report from the World Organisation for Animal Health, Cambodia and South Africa have confirmed new occurrences of the disease in the last two weeks. While over 90% of the cases remain in China, the continuing spread of the disease is keeping markets on edge. Lean hog futures on the Chicago Mercantile Exchange have soared, rising 11% in the first two weeks of April and 21% since the beginning of 2019.