Source: CoBank
A new report from CoBank’s Knowledge Exchange Division says the threat of a more widespread African swine fever virus and disturbance in the world’s pork supply chain due to trade disruptions is expected to drive prices higher with potential benefits for the global protein sector.

China’s hog prices have climbed 25% since July and the escalating trade dispute with the U.S. has limited China’s import options. In addition to the import restrictions, CoBank estimates that more than 70% of China’s hog production is being affected by the larger quarantine and hog movement restrictions in China.

“African swine fever in China may be the event that helps bring U.S. pork supply and demand back into balance for years to come,” says Will Sawyer, lead animal protein economist with CoBank’s Knowledge Exchange Division.

In the past, when pork prices have increased, the Chinese consumer has switched to chicken as their main source of animal protein. However, since 2014, China’s poultry sector has struggled with negative publicity.

“In 2016, when hog prices climbed to all-time highs, chicken prices barely budged,” says Sawyer. “Consumer switching is always a possibility during price shocks, but with human fatalities and other food safety risks in China, we think consumers will continue to demand pork, which will be met by imports rather than domestic Chinese production.”

However, these increased imports will come at increased cost as the Chinese source pork from the European Union and Canada, says Sawyer.

“The real opportunity here is for U.S. producers to capitalize on reduced global competition in pork,” says Sawyer. “Pork producers could potentially climb back to breakeven and maybe to positive territory next year, but it will largely depend on how the ASF story unfolds in China.”

To read the full report, visit cobank.com.