Analysis Pigs
Prices on the Chinese pork market are falling again
Chinese pork production rose sharply in the first nine months of 2023. Due to the large supply, the revival on the pork market proved to be short-lived. The low pork prices have had a clear effect on Chinese imports from Europe all year long. Although prices are likely to rise in 2024, the European market is unlikely to benefit.
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In the first nine months of the year, production increased by 3,6% to 43,01 million tonnes. Production was higher throughout the year, but Chinese pork production experienced strong growth, especially in the third quarter. In the third quarter, production increased by 4,8% compared to the previous year. In total, no less than 12,69 tons of pork was produced in China during that period, according to data from the Chinese National Statistics Bureau.
As a result of the higher production, the Chinese pork price had fallen considerably. In mid-July, Chinese slaughter prices fell to 14,19 yuan (€1,83 at current exchange rates). When the Chinese government decided to replenish their stocks in July and August, there was a brief revival. At the end of August, Chinese slaughter prices rose to 17,21 yuan (€2,22). There is now pressure again on pork prices. According to the last available quote in early October, the price had fallen to 16,27 (€2,10) yuan and according to Reuters the price has since fallen 4,5% to 15,54 yuan (€2,01).
Europe loser
The biggest loser from higher Chinese pork production appears to be the European Union. Because European pork prices are much higher than North and South American prices, it is currently a lot less attractive to import pork from Europe. Exports from the European Union to China have taken a significant step downward. Between January and August 2023, 804.761 tons of pork were exported to China. In 2022, exports amounted to 939.222 tons, about 14,3% more than last year.
This decline is much greater than the decline in other leading pork producing countries. The Brazilian pork production fell by only 2023% in the first nine months of 2,1 compared to 2022 to 311.100 tonnes. The United States even achieved a positive result in the first eight months of 2023. Between January and August, the US exported 348.491 tonnes of pork to China, according to data from the US Meat Export Federation (USMEF). In 2022, exports were down about 10% over the same period, with the United States exporting about 317,845 tons of pork to China.
Shrinking pig herd
It seems that this situation will change slightly next year. There are signals that Chinese pork production will decline again in 2024, which in theory could provide room for exports from the European market. The United States Department of Agriculture (USDA) estimates that Chinese pork production will decline by 2024% in 1 from 56,50 million tons to 55,95 million tons. According to the USDA, this is because low prices are starting to turn against the Chinese market. Pig farmers currently seem little motivated to invest. In addition, the USDA notes that low slaughter prices are causing smaller producers to close their businesses.
However, it is unlikely that Europe will be able to benefit from lower pork production for long. About a month and a half ago China announced to accept pork from Russia for the first time in fifteen years. In response to the news, Russia has set a target of exporting 200.000 tons of pork to China per year.