Pork out of favor in China, consumption down

Most striking are the findings about consumption development in China. The agency sees that the demand for pork has decreased significantly in 2019 and 2020 due to tight availability. Although pork remains the most important animal protein, consumption has fallen by 12%, according to Fitch. It bases this on figures from the US Department of Agriculture. Consumers now more often choose other animal proteins or consume less meat.

Import further back
Further causes of the current low prices in the country are the sharply increased production and the, historically speaking, still high import volumes. Many livestock farmers invested in expanding their pig herd in 2020 and the first half of 2021. These companies do not simply plan to reduce production again, according to Fitch. The high import volumes also continue to put pressure on price formation. Although imported quantities have already fallen sharply, they are still higher than a few years ago. According to the company, some of the importers are bound by contracts that still require them to purchase meat from abroad.

Fitch expects a better balance between supply and demand during 2022. This will arise from declining meat import volumes and intervention by the Chinese government. The number of sows in China is currently about 7% above the desired number. Government intervention will ensure that supply normalizes.