A steady increase in Chinese pork imports combined with rising feed, fertilizer and energy costs will support a recovery in pork prices in the coming year, said the head of Europe's largest pork producer Danish Crown today.
A combination of soaring Chinese pork production and coronavirus lockdowns has turned the global pork market on its head, causing prices to fall in recent months as prices of most other commodities have risen. EU figures show that European pig prices are currently around 17% lower than in the previous year.
Danish Crown, which produces around 18 million pigs each year, found that exports to China are a fraction smaller than last year when the company shipped a record 30% of its total production to China.
"The pig market, especially in China, has declined sharply in recent months. Demand from China has been very, very weak since June," said Jais Valeur, CEO of Danish Crown, in an interview.
After outbreaks of the incurable African swine fever brought much of Chinese pig production to a standstill in 2018, the country resumed production at record speed.
China's pork production rose to its highest level in three years in the third quarter. But domestic production combined with high imports in the first half of the year caused prices to collapse by around two thirds this year.
Some farmers in China have since sold their herds and given up pig fattening, while others have taken the opportunity to get rid of less productive sows.
As a result, Danish Crown's exports to China are rising again, albeit from a low level, Valeur said.
In addition, the cost of feed, fertilizer and energy are pushing prices up around the world, while recent low prices have led some producers in Europe to stop production.
"We will see the global pig market normalize in the coming year," said Valeur.
According to Danish Crown, the company's net profit for the year ended September 30th rose 5% to DKK 2.26 billion (DKK 342 million).US dollars), although sales fell by 4% to 58.3 billion crowns.
Source
Hansa Terminhandel GmbH