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Chinese pork market likely to be more volatile in 2021
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Chinese pork market likely to be more volatile in 2021

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DES MOINES, Iowa — China is still by far the biggest piece in the pork export puzzle, but it isn’t the only one, according to experts who spoke at the Work Pork Expo here June 10.

Calling it “a really interesting time,” Rupert Claxton, meat director for Gira International, said the world meat market is experiencing a bit of upheaval at the moment. COVID-19 is still a factor and the gradual ending of COVID restrictions are connected.

But there is also the question of the continued presence of African swine fever, not only in China but also in Poland and in some wild hogs in Germany. Throw in some confusion about trade negotiations and the future of the World Trade Organization, add a dash of Brexit craziness, and you have a spicy brew of trade stew.

In 2018 the United States exported about the same amount of pork to China and Japan. Then the Chinese market took off, and now the U.S. exports three to four times as much pork to China as to Japan (although Japan remains an important market). Part of that was driven by the discovery of African swine fever in China.

Chinese buying was the fundamental driver behind the jump in pork prices last year.

This rising grain prices have meant higher feed prices and that is the No. 1 concern for most U.S. pork producers, Claxton says.

What’s more, the Chinese market is likely to be pretty volatile in the next year, according to Joel Haggard, senior vice president of the Asia Pacific Region for the U.S. Meat Export Federation.

China still has the goal of self-sufficiency, Haggard says, although that is probably an unrealistic goal. The Chinese are building huge, vertically integrated pork operations. One such facility holds 84,000 sows and includes a packing facility and other needs on site. But Haggard says China is not as good at building and operating medium-sized facilities and those would be necessary in the long run.

In the short run, Claxton says the pressure on pork prices could be due to a sell-off of stock in China due to the recent ASF discoveries. If that is the case, prices could bounce back quickly. When looking at world market trends, he says the United States is very efficient but Europe does a better job at providing specific cuts due to the presence of smaller packing plants and slower line speeds.

“It’s not as simple as having the cheapest pig when it leaves the farm,” he says.

Meanwhile, Brexit is a wild card in the market. The split between Britain and the EU became final on Jan. 1, but there still isn’t a free trade agreement between the two entities which means there is plenty of paperwork and more than a few complications with trade between the island and the continent.

Claxton, who is English, compares the move to what would happen if Texas decided to leave the United States. There would be a mountain of details that would be endlessly frustrating.

“We’re working through it,” he says.

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Gene Lucht is public affairs editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.

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