News African swine fever
African swine fever changes trade flows
African swine fever is spreading rapidly through Asia, but Europe has also not escaped the risk. Rabobank even reports in a new report that in some cases it may take years before production levels are back to relatively normal levels.
The highly contagious animal disease has already established itself in Laos, Vietnam and Cambodia. New cases have also recently been discovered in North Korea† Since the virus can spread quickly, Rabobank expects that all Asian pig countries could become infected with African swine fever this year. As a result of the illness, the bank also expects that the Tiếng Việt pork production will fall by 2019% to 15% in 20, compared to 2018.
Not only Asia is ravaged by the virus, because it has also found its way in Europe. The main difference with Asia, however, is that in Europe it mainly concerns outbreaks among wild boars and not outbreaks on pig farms. In particular, the Baltic States and the east of Poland suffered from the animal disease for years. Belgium was also affected at the end of last year, but is now booking good progress in eradicating the disease.
Recovery of more than 5 years
If we look at the situation in China, where all provinces have been affected by the virus, Rabobank expects that the at least 5 years It may take time for pork production to recover to previous production levels. Based on recent developments, the bank expects operating losses in China to now stand at 40% and could rise to more than 50% by the end of the year.
In addition, the bank foresees lower pork production, mainly due to the sharp increase in the number of slaughters in the first half of 2019. "The production loss from China has changed global trade flows," writes Chenjun Pan, senior analyst at Rabobank in the statement. report. Europe also sees opportunities in China, which is reflected in recent export figures. In the first 5 months of 2019, exports to China increased by 41%, compared to last year.
Market speculation has also contributed to the volatility of international prices. Pressure for further price increases will also force traditional pork importers (such as Mexico, Japan and South Korea) to compete proactively. According to the bank, this leads to higher costs in the long run. In addition, the tight supply means that the Chinese pig price is on the way to the record from 2016 to break.
More factors
Trade flows are also affected by the fact that exports from Brazil continue to increase, mainly due to the return to the Russian market. On the other hand, the Philippines has suspended imports of pork from Vietnam, Cambodia, Japan, Germany, the Netherlands, France and Austria. This is because of the fear of a possible infection with African swine fever.
It is not only issues related to African swine fever that influence the changing trade flows. According to Rabobank, the highly unstable trade relationship between the United States and China also has a major impact. If China lifts tariffs on American pork, trade flows will change again.
Kimberly Baker
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