The Covid-19 (SARS-CoV-2) pandemic brings many uncertainties to the global pork market. With various disruptions to the supply chain, Rabobank has revised down pork production estimates for 2020 in major producing countries.
“Labor shortages, operational suspensions, soft demand, and channel shifting will force industry players to increase automation, adopt digitalization, improve plant working conditions, streamline processing, and integrate along the supply chain in order to optimize operations and secure margins,” said Chenjun Pan, senior analyst for animal protein at Utrecht, Netherlands-headquartered RaboResearch.
Global trading is challenged by even more uncertainties, due to rising geopolitical tensions, unsettled regional negotiations, and Covid-19. The Rabobank Five-Nation Hog Price Index has dropped in 2020 in response to these uncertainties. In China, imports are slowing down, Europe expects lower production, and US prices are under pressure due to high hog inventories. Brazil, however, had higher exports in the first half of the year.
New Strain of Swine Flu in China
Meanwhile, late last month Fox News reported Chinese researchers have identified a new strain of the swine flu that has the potential to become a pandemic among human populations. It has been labeled G4 EA H1N1.
“Researchers say the virus has ‘all the hallmarks’ of being highly adapted to spread from person to person and trigger a global outbreak. Given that it’s a new development, people will likely have little to no immunity,” reported Fox.
Nottingham University Kin-Chow Chang, who is monitoring the new strain, told the BBC: “Right we are distracted with coronavirus, and rightly so. But we must not lose sight of potentially dangerous new viruses.”
Floods Could Have Major Impact on Supply
Reuters reported on July 10 that surging outbreaks of deadly African swine fever in some parts of southern China following heavy rains have led analysts and industry sources to voice concern that “a big setback for Beijing’s goal of replenishing pork supplies” could be in the making.
The story added: “China’s hog herd, by far the world’s largest, shrank last year by around 180 million pigs, or 40%, after the incurable disease decimated farms. Pig producers are building new farms and restocking amid the push to restore lost pork production and tame runaway meat prices.”
While China braced for the damaging effects of record water levels along the Yangtze River, Bloomberg News on July 21 reported: “The flood has forced millions of people to leave their homes and could impact agricultural and manufacturing output, as well as constrain consumption and investment demand, according to economists from Nomura Holdings and Huachuang Securities Co. The rains will also send pork and vegetable prices even higher, keeping consumer inflation at an elevated level for another couple of months.”