Across Europe, trade continues to be overshadowed by an overhang of pigmeat in key markets, weak food service demand and the suspension of German pigmeat exports into key international partner markets.
The latest EU average reference price has declined to €1.28/kg.
The latest Irish pig price is 24c/kg above this at €1.52/kg, which represents its lowest level since April 2019.
Chinese pigmeat production
Since 2018, Chinese pigmeat production has been severely impacted by African swine fever (ASF), which has curtailed pigmeat output.
The USDA predicts that Chinese output will recover during 2021 to 43.5m tonnes
Up until 2018, Chinese pigmeat production accounted for 48% – or 54m tonnes – of global pigmeat output. ASF continues to spread, but the impact is declining, as backyard production is being replaced by large sophisticated integrated units.
The USDA predicts that Chinese output will recover during 2021 to 43.5m tonnes, which represents around 80% of pre-ASF production levels.
Local prices in China
Chinese live pig producer prices were close to record levels at 38 CNY/kg (€4.86/kg) at the beginning of 2021. However, latest prices have fallen back to 32 CNY/kg (€4.09/kg) as demand seasonally softens post Chinese new year (12 February) and the government has released several rounds of frozen pork from state reserves to curb prices.
Rabobank estimates that Chinese live pig prices will fall back to between 22 and 26 CNY/kg (€2.80/kg to €3.32/kg) for the remainder of the year, as local production is expected to recover. These forecasted prices will still be around 50% to 60% higher compared to pre-ASF levels.
Chinese pigmeat demand and outlook
While China’s pigmeat production has entered into a cycle of recovery, the country will continue to be well below self-sufficiency levels for pigmeat. In addition, significant import requirements are expected for 2021, on the back of record levels for 2020, where Chinese pigmeat imports reached 5.6m tonnes.
European pigmeat exports rose by 17% to 5.4m tonnes during 2020
During 2020, Ireland exported a record 94,000t of pigmeat to China. As a result, the Chinese market became the number one outlet for Irish pigmeat suppliers, and market dynamics suggest that 2021 will follow a similar pattern.
European pigmeat exports rose by 17% to 5.4m tonnes during 2020, with almost 61% of these exports directed to China. China will continue to remain the number one international market destination for European pigmeat suppliers during 2021.
Brazilian exports globally broke record levels during 2020 when over 1m tonnes were shipped, with exports to China doubling
However, European pigmeat shipments to this market will be affected by the ongoing suspension of German shipments due to ASF detection in their wild boar population. This will lead to increased export activity from some of the leading global pigmeat powerhouses, including the US and Brazil, during 2021.
Brazilian exports globally broke record levels during 2020 when over 1m tonnes were shipped, with exports to China doubling. A further 3% increase in Brazilian output during 2021 will continue to underpin this growth in exports, as local demand continues to recover from COVID-19 disruption.
US exports will be curtailed slightly by some decrease in production through the first half of 2021. This follows the lingering impact of COVID-19-related challenges in the supply chain last year and some increase in feed costs for 2021.