USDA updates projection for China’s swine supply and demand

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Porto Alegre, July 30, 2020 – This July, the U.S. Department of Agriculture (USDA) updated its projections for the global pork market, with highlight on China. The government of China has also released its data on pork production, livestock, and imports for the first half of 2020, which is worth comparing with the USDA’s data. According to the USDA’s report, Chinese pork production should reach 36 million tons in 2020, a positive adjustment of 2 million tons compared to the April estimate. On the other hand, the Chinese government reported that in the period of Jan-Jun 2020 the country’s pork production totaled 19.98 million tons. Thus, USDA may promote a new adjustment in its November report.

Farmers are more actively seeking to rebuild their herd at this time due to the high price of pork in the country. Authorities are auctioning part of the government stocks to contain the inflationary movement of pork in the interior of the country. There is still difficulty in containing the price movement even with the record volumes imported in the first half of 2020. It is worth noting that the stricter control of cargoes entering the country and the interruption of the purchase from several slaughterhouses should impact the import numbers of the country in the short term, as previously mentioned, which may accelerate this upward process in the coming few weeks.

The demand for piglets in the Chinese market is great and causes a sharp rise in prices. According to data from the Ministry of Agriculture and Rural Affairs of China, the average price paid per kilogram of piglet in the country has already risen about 40% since the beginning of January, standing at 104.94 yuan in the third week July. In relation to the averaged of 43.52 yuan at the end of July 2019, there was an increase of 141%.

For the final herd of 2020, USDA estimates 355 million head of pigs, up 14.36% from 310.41 million head at the end of 2019. In parallel, the China Merchandise Reserve Management Center disclosed that at the end of the first half of 2020, the country’s herd already reached 340 million head.

Agência SAFRAS Latam

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