FORT COLLINS- U.S. pork trade with China made a big breakthrough two years ago as the Chinese hog herd was thinned by disease and political relations began to mend, though U.S. exports to the top pork consumer have not performed as well this year relative to those from other suppliers.

China’s pork production is expected to weaken in 2022 due to a smaller herd and low producer profits, and that is likely also to ease consumption as the gap will not be filled by imports.

The United States is China’s No. 2 pork supplier after Spain, but sales have slowed perhaps more than expected. China’s expanded affinity for U.S. beef is making up for at least some of that, driving those exports to record levels.

Pork prices in China last week slid to the lowest levels since early 2019, when the global market first learned the severity of African swine fever (ASF) in China’s hogs. Those prices are more than 60% off the year-ago ones, making profitability for producers very low or negative.

That is expected to limit next year’s pork output, which the U.S. Department of Agriculture’s Beijing office last month placed at 41.5 million tonnes. That would be down nearly 14% from its estimate for this year and up 14% from 2020, but well off the pre-ASF levels of around 54 million tonnes.

This has been of concern for global grain and oilseed traders because if China’s pork production declines, that could reduce its import demand for feed ingredients, especially if China has the record grain crops that are expected this year. However, that may be good news for meat exporters.

PORK IMPORT SLOWDOWN

Higher pork production this year versus last has eased China’s imports of its staple protein. August imports totaled 280,000 tonnes, the lowest monthly volume in well over a year and down 21% from August 2020.  The January-August volume reached 2.93 million tonnes, up just 1% from the same period last year, according to customs data.

May 2021 marked the first time in more than a year that China’s monthly pork imports were lower than in the same month a year earlier, and that gap versus 2020 has widened each month since.

China’s reliance on U.S. pork seems to be slipping more than its overall imports. Monthly U.S. pork exports to China have not been greater than in the prior year since November.

Through Sept. 9, China had purchased 361,454 tonnes of fresh, chilled or frozen muscle cuts of U.S. pork for export in 2021, and 7% still awaits shipment. Those commitments are down about 43% from the same date in 2020 but up 29% from 2019, and they represent 25% of all 2021 U.S. sales.

Last year at this time, China accounted for 39% of all U.S. pork sales and Mexico was second at 25%, though Mexico leads in 2021 at 34% as its purchases are up about 19% on the year.

Through July, 2021 exports of U.S. pork and pork products to China were down 20% from the same period a year ago. But both Europe’s and Brazil’s pork exports to China during this time were up from last year. The European Union accounts for about 60% of China’s pork imports and Brazil is the No. 3 supplier.

BEEF SURGE

U.S. exports of beef and beef products to China have greatly taken off in 2021, and USDA partially attributes this to Chinese consumers’ ability and willingness to pay more for what is considered a luxury protein.

Beijing in 2017 lifted a 14-year ban on U.S. beef, though the most noticeable impact on U.S. business has materialized this year. High domestic beef and pork prices have also driven recent growth in beef imports.

Sales of fresh, frozen or chilled U.S. beef to China totaled 130,319 tonnes as of Sept. 9, up nearly 400% from a year ago and more than 20 times the 2019 volume to date. Those sales account for 15% of sales to all buyers.

January-July U.S. beef exports to China topped 99,000 tonnes, accounting for 12% of exports to all destinations versus 1.3% in all of last year. So far in 2021, China is the No. 4 recipient of U.S. beef behind Japan, South Korea and Mexico, up from No. 8 in 2020 and No. 13 in 2019. 

Beef’s priciness versus other meats makes those exports stand out in terms of dollar value. At $773 million, U.S. beef exports to China in the first seven months of the year accounted for 4.5% of all U.S. agricultural exports to the Asian country versus 1% in full-year 2020.

That puts beef at No. 7 on the list so far this year. Corn was the top U.S. product to China between January and July, valued at $4.1 billion, and soybeans placed second at $3.6 billion.

South American countries as well as Australia and New Zealand also supply China with beef. USDA’s Beijing counterpart reports that the United States is seen as a premium-priced beef supplier providing consistent and standardized high-end cuts.

The agency predicts China’s 2022 beef imports will rise 6% to a new record of 3.3 million tonnes. Next year’s pork imports are pegged at 5.1 million tonnes, slightly off the 2020 high.

Karen Braun

(Editing by Matthew Lewis) ((karen.braun@thomsonreuters.com; Twitter: @kannbwx))