Inside Pigs
Vion: 'Coronavirus hinders pig export'
The outbreak of the Coronavirus in China is causing a lot of unrest and tension. It also hinders the export of pork to the Asian country, says Vion.
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The coronavirus has China in its grip. More than 100 people have already died from the virus. Worldwide, about 4.500 people are infected, including in France and Germany. The virus emerged in the run-up to the Chinese New Year that was celebrated last weekend. This put a shadow on the party. For example, many party activities in major cities such as Beijing and Shanghai were cancelled.
Pork consumption normally peaks during the Chinese New Year celebrations. Reportedly, due to the outbreaks of the Coronavirus - and the unrest that this entails - less pork has been consumed this year than had been calculated in advance.
Logistic problems
Vion indicates that meat exports are currently encountering logistical problems due to the closure of cities. The Chinese importers are adopting a wait-and-see attitude, which in turn puts a brake on European pork exports. The Coronavirus is also causing turmoil in the financial and commodity markets. The oil price has fallen sharply in recent days. The price of a barrel Brent oil is now trading below $60. Analysts speak of an exaggerated reaction.
It is difficult to say how long the situation will last. This probably depends a lot on the period when the normal rhythm in China has started again. Chinese companies will remain closed for longer now that the Chinese government has extended the holiday around the Chinese New Year.
Short-term versus long-term
In the short term, pork exports appear to be affected by the Coronavirus. For the time being, this is not putting pressure on pig prices in the Netherlands and elsewhere in Europe. For example, the Vion quotation will remain the same this week at €1,87 per kilo. Pig prices in China are also quite stable at the end of January at a price level of € 4,50 per kilo, live weight.
In the slightly longer term, European sales opportunities are still very positive. Thus gave the Rabobank last week indicated that Chinese pork imports are likely to set a new record this year. The bank expects an increase of about 25% to 4,25 million tons.