While African swine fever continues to devastate pig herds and pork production in China, its spread to other Asian countries is raising concerns.
“Recent outbreaks in South Korea, the Philippines and Timor-Leste and the looming threat to Thailand greatly broaden the concern generated by ASF,” Rabobank analysts said in an update released this week.
The disease also continues to spread in Vietnam, Laos, Cambodia, Myanmar and North Korea and has become a challenge in all of Asia, they said.
“The impacts across Asia are likely to be just as challenging as they have been in China, and we expect to see herd and production losses growing as we move into 2020,” they said.
Rabobank is expecting herd losses in China to reach 55% in 2019 and the pig supply in 2020 to be lower than 2019.
The pork production decline in 2019 will be slower than the herd loss due to a large liquidation early in the year. The analysts expect pork production to be down 25% in 2019 with a further drop of 10-15% in 2020.
Prices of live hogs, piglets and pork have all set records. Pork consumption is expected to drop sharply in response to soaring prices and lack of supply, and prices are expected to increase further in the next few months as the peak consumption season approaches.
Retail prices for beef, chicken and sheep meat have also risen and could continue to increase in the coming months.
China’s pork imports also continue to rise both in volume and pricing. Import volumes were up 30% year over year in the first eight months of 2019, and increases are expected to continue as peak season creates additional demand.
Pork exports to other Asian countries are also expected to increase the rest of the year and into 2020, increasing competition in pork trade and maintaining upward pressure on prices.
“Prices have already reached inflationary levels, and demand erosion will become more apparent in the coming months — putting a ceiling on pork prices and lifting prices for trade in other species,” the analysts said.
Despite increases in pork exports to China and other Asian countries, the region will be structurally short of pork in 2019 and 2020. In addition, risks remain for ASF spreading to more countries in Asia and elsewhere, they said.
There are also global implications for exporters, the analysts said.
“Growing pork exports and rising prices will challenge exporters to find an appropriate balance between increasing production, chasing high prices for exports and supporting local customers,” they said.
The analysts anticipate relatively unstable market conditions for the next three to five years until biosecurity measures increase substantially, an ASF vaccine is widely available, exports increase materially and other protein supplies increase structurally.