Is German pork now hitting a Chinese wall?

The outbreak comes at an extremely unfortunate time, now that the pig market was just recovering from the corona crisis. After European demand for meat collapsed, several slaughterhouses were forced to close their doors this summer due to corona outbreaks among staff. The market was disrupted, resulting in full cold stores and a huge supply of pigs. In addition, China imposed an export stop on slaughterhouses affected by corona.

Things started to get better a few weeks ago. Slaughterhouses are running again, supply is shrinking and, with the exception of Vion, China canceled the export ban. The market could prepare for better times, as China is still struggling with a major meat shortage and European demand for meat is slowly recovering. Last week's higher pig price underlined the improved sentiment. Now the question is what remains of those perspectives after the discovery of the infected wild boar in Germany.

South Korea stops imports, does China too?
Trade in pork within Europe will remain largely intact, German Agriculture Minister Julia Klöckner has said. There is a good chance that China will decide to ban German pork for the time being, as happened a few years ago when ASF was found in Belgium. This would be a big blow. After all, China is importing record high volumes this year. In the first half of 2020, the Asian superpower imported 1,6 million tons, 75% more than the same period last year. In the first half of the year, Germany sold some 450.000 tons on the world market, largely to China. 

South Korea has already indicated that it will close its borders to German pork. China has not yet announced anything. Neither does Japan. This keeps the market in suspense. How will the pig price react? Our eastern neighbors have an enormous influence on pricing in Europe. When Germany sneezes, the Netherlands usually has a cold. Considerable numbers of live pigs are sent to German slaughterhouses, which may lose their value considerably.

Reason the other way around
You could also argue the other way around. If Germany can no longer export to China, this will offer additional sales opportunities for other countries. Such as Spain, the United States and Brazil. But the Netherlands and Denmark can also benefit from this. When ASF was detected in Belgium, this did not prevent higher pig prices in surrounding countries. But at the same time, Germany's influence cannot be compared to that of Belgium. The uncertainty is great. To be continued.