China Official Predicts Lower Pork Imports in Second Half of 2012
Published: Sep 21, 2012
After being up 30 percent by volume for the first seven months of 2012, Chinese pork and pork variety meat imports will likely soften in the months ahead, according to an official from China’s Ministry of Commerce (MOFCOM).
The official, Ma Hongwei, is first secretary of MOFCOM’s Department of Foreign Trade. He spoke at this week’s 2012 China International Meat Trade Conference in Shenzhen, attended by USMEF and more than 100 meat importers and exporters. The conference was sponsored by MOFCOM’s affiliated meat traders’ association, the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-products (CFNA). Under China’s import regime, only CFNA members can conduct imports or exports of red meat and poultry, so the significance of Secretary Ma’s predictions was not lost on those present.
According to Secretary Ma, this year’s record pace of importing is unusual in that Chinese hog inventories are high and domestic pork prices have remained relatively low, following the record levels of 2011. Meat traders have been overly optimistic about prospects for domestic pork price increases as well as a repeat of 2011’s tight supply situation. This has resulted in aggressive orders and a plethora of stockpiled supplies.
Ma also reported that in addition to ample supplies, cooling economic growth had pinched consumption, and that the addition of shipments from newly eligible pork supplying countries, most notably Germany, the Netherlands, Chile and Brazil, had added to the high shipment numbers. The weaker euro and Brazilian real helped make pork from those regions competitively priced and attractive to Chinese importers. According to Guan Xiangying, section chief in Chinese Customs Anti-Smuggling Department, smuggling of meat products also has added supply to the market.
MOFCOM data implies a mixed bag for this year’s Chinese pork imports. Including variety meats (but excluding those imported by Hong Kong), imports reached approximately 783,500 metric tons (1.7 billion pounds) during the first seven months of 2012, eclipsing the record pace of 2008. However, in June and July of this year, shipments dropped below the 100,000 ton/month level, while the monthly import average during the first quarter of the year was nearly 120,000 tons.
As for the third quarter of this year, Chinese pork prices have been mostly stable with the average live hog price on June 1 at RMB 13.27/kg. ($95.33/cwt.), rising only slightly to RMB 13.85/kg. ($99.48/cwt.) last week. Hog prices were still 27 percent lower than the same period in 2011 but up 20 percent from 2010. China’s piglet prices were also around 40 percent lower than last year (at $1.83/lb.) while corn and soybean meal prices have moved higher, to more than $750/ton and $10/bushel. “We’ve read reports predicting Chinese pork shortages this fall and winter,” said Jianwen Liu, USMEF’s China director, “but we’ve yet to see signs of any supply problems.”
While there is little hard evidence of a looming pork shortage, there are signs of economic headwinds in China. China’s GDP growth is moderating, which has influenced the performance of almost every major sector. Official news channels this week noted that the growth in China’s catering industry is at a nine-year low, with profit growth for the industry at 13 percent versus predictions of 16 percent. A member of the China Cuisine Association reported that catering industry input costs had risen nearly 15 percent over the last five years, eroding profit margins.
“Restaurants are still full and the sector is still expanding, but the current economic softness is eating away at the industry’s bottom line,” said Joel Haggard, USMEF Asia-Pacific regional senior vice president.
Another potential headwind is the reportedly large inventories of frozen meat and poultry in Hong Kong. Although Hong Kong imports of all pork and pork products were down 8 percent through July (the slowest since 2007), local traders report that cold storage facilities are full of imported proteins.
USMEF looks forward to sharing and gathering more indicators of China’s recent hog production trends during its Hog Summit Sept. 22 in Beijing. USMEF has been conducting primary field research on Chinese hog producer intentions, and Haggard will present the study’s initial findings at the conference. The U.S.-China Hog Summit is being cohosted by USMEF, the U.S. Grains Council and China Animal Agriculture Association (CAAA), China’s umbrella national livestock producer association. Funding for USMEF’s participation is provided through USDA’s Emerging Markets Program.
“It promises to be an informative and productive meeting, promoting future communication, cooperation and development between these two countries’ pork policy and industrial leaders,” said Haggard.
The official, Ma Hongwei, is first secretary of MOFCOM’s Department of Foreign Trade. He spoke at this week’s 2012 China International Meat Trade Conference in Shenzhen, attended by USMEF and more than 100 meat importers and exporters. The conference was sponsored by MOFCOM’s affiliated meat traders’ association, the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-products (CFNA). Under China’s import regime, only CFNA members can conduct imports or exports of red meat and poultry, so the significance of Secretary Ma’s predictions was not lost on those present.
According to Secretary Ma, this year’s record pace of importing is unusual in that Chinese hog inventories are high and domestic pork prices have remained relatively low, following the record levels of 2011. Meat traders have been overly optimistic about prospects for domestic pork price increases as well as a repeat of 2011’s tight supply situation. This has resulted in aggressive orders and a plethora of stockpiled supplies.
Ma also reported that in addition to ample supplies, cooling economic growth had pinched consumption, and that the addition of shipments from newly eligible pork supplying countries, most notably Germany, the Netherlands, Chile and Brazil, had added to the high shipment numbers. The weaker euro and Brazilian real helped make pork from those regions competitively priced and attractive to Chinese importers. According to Guan Xiangying, section chief in Chinese Customs Anti-Smuggling Department, smuggling of meat products also has added supply to the market.
MOFCOM data implies a mixed bag for this year’s Chinese pork imports. Including variety meats (but excluding those imported by Hong Kong), imports reached approximately 783,500 metric tons (1.7 billion pounds) during the first seven months of 2012, eclipsing the record pace of 2008. However, in June and July of this year, shipments dropped below the 100,000 ton/month level, while the monthly import average during the first quarter of the year was nearly 120,000 tons.
As for the third quarter of this year, Chinese pork prices have been mostly stable with the average live hog price on June 1 at RMB 13.27/kg. ($95.33/cwt.), rising only slightly to RMB 13.85/kg. ($99.48/cwt.) last week. Hog prices were still 27 percent lower than the same period in 2011 but up 20 percent from 2010. China’s piglet prices were also around 40 percent lower than last year (at $1.83/lb.) while corn and soybean meal prices have moved higher, to more than $750/ton and $10/bushel. “We’ve read reports predicting Chinese pork shortages this fall and winter,” said Jianwen Liu, USMEF’s China director, “but we’ve yet to see signs of any supply problems.”
While there is little hard evidence of a looming pork shortage, there are signs of economic headwinds in China. China’s GDP growth is moderating, which has influenced the performance of almost every major sector. Official news channels this week noted that the growth in China’s catering industry is at a nine-year low, with profit growth for the industry at 13 percent versus predictions of 16 percent. A member of the China Cuisine Association reported that catering industry input costs had risen nearly 15 percent over the last five years, eroding profit margins.
“Restaurants are still full and the sector is still expanding, but the current economic softness is eating away at the industry’s bottom line,” said Joel Haggard, USMEF Asia-Pacific regional senior vice president.
Another potential headwind is the reportedly large inventories of frozen meat and poultry in Hong Kong. Although Hong Kong imports of all pork and pork products were down 8 percent through July (the slowest since 2007), local traders report that cold storage facilities are full of imported proteins.
USMEF looks forward to sharing and gathering more indicators of China’s recent hog production trends during its Hog Summit Sept. 22 in Beijing. USMEF has been conducting primary field research on Chinese hog producer intentions, and Haggard will present the study’s initial findings at the conference. The U.S.-China Hog Summit is being cohosted by USMEF, the U.S. Grains Council and China Animal Agriculture Association (CAAA), China’s umbrella national livestock producer association. Funding for USMEF’s participation is provided through USDA’s Emerging Markets Program.
“It promises to be an informative and productive meeting, promoting future communication, cooperation and development between these two countries’ pork policy and industrial leaders,” said Haggard.