MarketsFarm — Sharp losses in China’s hog herd due to African swine fever (ASF) are underpinning the North American pork market and could create export opportunities for Canada — if this country manages to stay disease-free.
ASF does not affect humans, but the highly viral disease is nearly 100 per cent fatal for hogs with no known cure. According to reports, China’s hog herd is down by 15 to 20 per cent, with larger localized losses in some areas because of the disease.
China produces roughly half of all the pork in the world, so “when they lose 15 per cent of production it makes a big deal,” said livestock economist Brad Marceniuk of Saskatchewan Agriculture in Saskatoon.
Anecdotal reports indicate actual losses to China’s hog herd may be much larger than official estimates. However, no matter the number, “the hog herd is declining, and at some point they will need to import more pork,” he said.
“If we’re still ASF-free, we could see more North American pork going to China,” he added, noting increased demand would likely be most noticeable in the second half of the year.
“We could see significant improvements in export sales,” said Tyler Fulton, director of risk management with Hams Marketing in Manitoba.
North American hog futures started to see a premium in August 2018, when the first reports of ASF started coming out, he said. The markets stabilized in subsequent months, but started rallying again this March as more news broke and the disease spread.
Fulton noted pork plays a significant role in the Chinese diet, which would likely limit the move to other protein sources, such as chicken or beef.
While trade issues between China and Canada could disrupt some potential export sales, “there’s only so much pork produced in the world,” said Marceniuk.
Canada exported nearly 300,000 tonnes of pork products to China in 2018 at a value of roughly $500 million, according to data compiled by Canada Pork International. China was the second largest export destination by tonnage and third largest by price.
With market opportunities looking positive, the North American hog sector is working hard to keep ASF out of Canada and the U.S.
The Canadian Food Inspection Agency will also host an invitational forum in Ottawa from April 30 to May 1 on preventing the spread of ASF.
“The disease can be transmitted a variety of ways, so there is a big concern to keep it out” of North America, said Marceniuk, adding that any such outbreak in Canada would likely lead to restrictions on exports.
— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.Tagged African swine fever, ASF, Canada, CFIA, Chinese pork, exports, hogs, losses, North America, Pork, pork products, swine fever