African Swine Fever and trade crisis are driving up demand
African Swine Fever and the U.S. trade dispute with China mean increased demand for pig meat, which is driving up prices. The dramatic decline in pigs in China also means that demand for Danish pig meat is rising.
Since June, the price of pig meat has risen significantly in China. Between 10 June and 31 July, the price increased more than DKK 3 to DKK 18 per kg live weight.
”Chinese pig meat prices are now DKK 5 higher compared to the beginning of the year and DKK 6 higher compared to one year ago,” says Karsten Flemin, Market Analyst at the Danish Agriculture and Food Council.
Shortage of pigs in China
After pig meat prices came to a standstill during the spring caused by a higher slaughter rate and sluggish demand, there was a significant change in early June when prices began to rise. Recent developments suggest that the decline in the supply of pigs is beginning to seriously impact China.
According to the Dutch Rabobank, the pig population in China has decreased by 40 per cent in one year, which should be compared with official statistics from China which shows a decrease of 25 per cent. This dramatic decline in China has resulted in an upsurge in Chinese demand for Danish pig meat. And all indications are that demand for pig meat from Europe will continue to increase.
Trade war continues
In addition to reduced pig production in China, demand is being positively affected by the fact that competitors in the U.S. and Canada currently have limited opportunities to export pig meat to China.
”Price trends for pig meat remain positive in Europe,” says Karsten Flemin. ”The strong demand from China should mean further price increases, which will mean a high price level in Europe going forward.”
As the U.S. and Canada have limited opportunities to export pig meat to China, they are very likely to focus on exporting pig meat to other Asian markets. The trade war with the U.S. has also meant that China needs to increase its imports from other countries, e.g. Argentina and Brazil.
Outbreak in Eastern Europe
African Swine Fever is also causing problems in Europe. In July, for example, Slovakia became the tenth European country to be affected by African Swine Fever. Serbia also recently reported its first outbreak of the virus. Four small pig farms have been affected, not far from the capital Belgrade.
In Bulgaria, too, a large number of farms have been affected by the disease. Like Romania, Bulgaria has a number of 'backyard' farms, which means there is a great risk that the virus will spread uncontrollably throughout the country. Poland’s large pig farms were also affected by the disease during the summer.