Gro expects China’s pork imports are on track to drop sharply next year, contrary to the USDA’s forecast for higher pork imports.
As China’s hog herd size returns to levels seen before the 2018 African swine fever epidemic, and as Chinese domestic pork prices plunge, there is less incentive for the country to continue importing large quantities of pork.
Gro expects China will import between 1 million and 2 million tonnes of pork in 2022, comparable to pre-ASF import levels. That would be a steep decline from imports of 4.5 million tonnes estimated by the USDA for 2021.
The USDA is forecasting Chinese pork imports will increase next year to 4.75 million tonnes, which Gro believes is too high. Gro first predicted a decline in Chinese pork imports in an Insight article in July.
View Gro’s China Hogs Display with charts showing hog and pork prices, producer margins, import volumes, and herd stocks.
A drop in Chinese pork imports next year would lower export demand primarily in Brazil and the US, where pork exports to China have already fallen in recent months. Reduced import demand by China could have negative implications for the profitability of US pork processors.
However, China’s increased hog herd size, and an expansion of industrial hog farming, will raise the country’s import demand for animal feed grains and oilseeds, including broken rice, feed wheat, corn, and soybeans. Since ASF began decimating China’s hog herd in 2018, international dry bulk shipping companies have kept a watchful eye on the country’s grain requirements and will likely need to continue to adjust forecasts for grain imports.
China’s falling pork prices, which suggest domestic pork supplies are sufficient to satisfy demand, erode incentives to import pork from abroad. Cash prices have dropped to 22.58 RMB/kg, similar to pre-ASF levels, from more than double that price at the start of 2021. Meanwhile, pork demand is yet to fully recover as seen via Gro’s China Pork Demand Forecast Model.
As a result, monthly pork import volumes have fallen to about 200,000 tonnes in September from 400,000 tonnes early this year.
Weak producer margins have spurred an increase in slaughter volumes, as the cost of feed makes it uneconomic to keep the hogs for longer. When margins turned negative, the Chinese government intervened to purchase pork for its reserves in July, pushing margins into positive territory again. The government’s action aligns with its strategic goal for China to reach 95% self-sufficiency in pork production, as Gro detailed in its 2020 white paper “China's New Push for Food Security.”