China’s skyrocketing pork prices indicate that there are strong opportunities for pork exporting countries to export to China.
That is the key message of a recent document Rabobank released, called ‘What is happening in China’s pork market?’ The bank writes that China’s pork prices skyrocketed at the start of 2016, reaching an all-time high of over RMB 20 per kg.
The bank points to causes, being a combination of farmers’ losses and government measures to close down unsuitable farms led to destocking over the past two years, which also drove the Chinese sow herd size to a historic low.
“China plays an increasingly important role in the global pork market,” said Chenjun Pan, senior animal protein analyst at Rabobank, in a press release which was shared together with the report. He continued, “China needs to increase imports to cover the supply gap in 2016. In total, we expect China to increase pork imports by 30%. The EU, the US and Canada are well-positioned to increase exports to China given their availability of product and the adaption of production systems in response to China’s ractopamine-free policy.”
Beyond 2016, the bank expects China to likely maintain its level of imports, even when local production recovers in 2017. Rabobank holds the view that local users of imported pork will continue to rely on imported pork due to its consistent quality and lower price, compared with local production.
The bank stated that leading pork processors and packers are already responding to this significant new trade opportunity, by adjusting production systems and taking advantage of current currency dynamics.
The bank expects that competition to export to China will grow as production expands and demand remains relatively stable. This means exporters will need to keep improving their productivity and investing in trade partnerships that can help secure their future access to the Chinese market.