Europe’s China-bound pork exports set to fall

By Oscar Rousseau

- Last updated on GMT

Europe's ractopamine ban means it will still enjoy strong pork exports to China in 2017
Europe's ractopamine ban means it will still enjoy strong pork exports to China in 2017

Related tags Pork European union China

Analysts warn Europe’s share of lucrative pork exports to China will fall as competition from the Americas - driven by Canada's drug-free pig herd - puts pressure on EU trade.

The European Union (EU) is the main supplier of pork to China, but the huge volumes the continent currently puts China’s way are expected to fall, according to Rabobank’s Global Pork​ Quarterly report. The EU is already expected to miss its target of shipping 1.9 million tonnes (t) of pork to China in 2016, because of increased prices and growing competition from nations such as Canada, which is flogging pork at a cheaper price.

In the first eight months of 2016, the EU accounted for 68% of pork exports to China, with the US and Canada accounting for 14% and 11% respectively. However, Rabobank expects that the EU’s share will drop to 62%, with the US and Canada increasing combined share to 28% in 2017.

Both Canada and the US are expected to expand their respective shares of the high-value Chinese pork market. Canada has been earmarked to grow much faster than the US in China, due to the fact its pig herd is largely free of the growth-promoting drug ractopamine.

Drug-fed pork
China does not import pork that has been fed the steroid ractopamine. This gives the EU an advantage over many other pork producers as its herd is completely free of ractopamine, as well as other growth-enhancing additives. However, thanks to the abundant supply of the drug-free herd in Canada, Rabobank said: “Canada may very well continue to be a greater supplier to China than the US.​”

Brazil’s exports are also tipped to surpass 100,000t in 2017, after just about reaching 5,000t last year. Thanks to a rise in the availability of – leading to low feed costs – Brazil’s booming pork exports​ to China exceeded 63,000t between January and August 2016.

Exports to China will continue to drive pig prices in 2017 and Rabobank said that “having access [and] being competitive in this important market​” were key for farmers and processors.

However, the bank also warns that an abundant global supply of pork, mixed with the looming constraints of slaughter capacity in the US, will put pressure on global prices.

This will result in a further decline of the Rabobank Five-Nation Hog Price Index in Q4, which turned unexpectedly in Q3,​” said Albert Vernooij, animal protein analyst at Rabobank. “Prospects for 2017 are weak, with global trade expected to stabilise and all main producers in expansion mode, making supply discipline key to the outlook.​”

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