As reported by UK levy body AHDB Pork, a total of 324,000 tonnes of frozen pork (-6% year-on-year) and 271,300 tonnes (t) of pig offal (-15% year-on-year) were received during the quarter.
EU shipments were the biggest casualty of this decline, down 14% (-58,800t), resulting in their market share declining by two percentage points.
Not far behind was the US, with shipments declining 11% (-13,700t), Canadian shipments dropped 9% (-6,500t) while imports from Brazil increased by almost 8,000t.
Prices in China have been falling since January and, by the week ended 25 April, averaged CNY10.71/kg liveweight (equivalent to 122p/kg), the lowest price on records going back to 2013. This is significantly down on last year’s live pig prices for the same period, which were CNY15.57/kg, and 2016’s level of reached CNY20.03/kg.
According to AHDB Pork, the oversupply situation has probably been driven by production growth exceeding the level of consumer demand. In 2017, the latest US Department of Agriculture (USDA) estimates suggested Chinese pork production increased by around 1%, with a further 2% growth anticipated for 2018.
AHDB Pork analyst Bethan Wilkins said: “This growth in production reflects pre-planned expansion in large-scale farms, where additional capacity is expected to come online this year. However, the forecast rate of expansion is lower than previously, with depressed pig prices expected to encourage smaller operators to exit the industry.”
Protein competition
The analysis showed that growth in demand for pork in China has started to slow.
“While pork remains the primary meat for most Chinese consumers, competition from beef, mutton and seafood is increasing,” said Wilkins. “In the most modern cities, consumption of pork is reportedly reaching saturation levels. Similar to western countries, consumers are increasingly switching into seafood and poultry, which are perceived as healthier.”
Outlook
Chinese pork consumption is still expected to increase by 2% (+1.1 million t) this year, largely in line with the growth in domestic production, but this is expected to be supported by lower pork prices.
“As domestic pork prices are anticipated to remain low, with consumption saturating, it seems very likely that import levels will reduce further this year,” added Wilkins. “The latest USDA forecasts anticipate a 6% decline in Chinese pork imports compared to year-earlier levels in 2018.”
US under threat
In 2017, the US occupied around 14% of the Chinese pork import market. Wilkins said that with their product now disadvantaged by an additional 25% tariff, there may still be scope for other countries to increase pork exports into China if the tariff remains in place.
“If US pork imports reduced to 25% of 2017 levels this year, with all other shipments remaining stable, Chinese pork imports would decline by over 10%,” she said. “The US market share is even larger for offal (20% of total volumes), meaning import volumes would reduce by over 22% if US shipments reduced to a quarter.
“Brazil is likely to continue recording the largest wins, following the loss of the Russian market, though there may be some scope for EU shipments to increase as their production expands.”
Wilkins added: “As ever, there is clearly much uncertainty over how the Chinese market could pan out this year. Further talks may see the trade dispute resolved or escalate further, with Chinese tariffs implemented on other products, including soybeans, which would also have implications for Chinese producer margins.”