Saturday, June 1, 2019

"China faces long struggle to tackle African swine fever"

The disease is having second and third order effects as well.
There had already been in place a small change in preference away from pork among Chinese consumers which rising prices would exacerbate.
The Chinese government has been doing what they can to keep pork prices from rising—which would spur substitution effects even further—by making releases from the strategic pork reserves so demand has not yet pushed prices up to the +70% range forecast a couple months ago.
If prices do jump that much, demand for pork drops further.

Additionally, dead pigs don't eat, so you're seeing lower demand for soybeans, a reduction more important to global soybean markets than the U.S. tariffs and/or Chinese boycotts.

First up, Reuters with the headline story, May 29:
It will take years for China to contain the deadly African swine fever virus that has spread throughout the country, which is the world’s biggest pork producer, the World Organization for Animal Health (OIE) said on Tuesday.

China has been struggling to control the epidemic, which some analysts predict could see up to 200 million pigs die or be culled this year, causing a huge shortage of pork locally and have economic impact on the meat and feed industry globally.
Outbreaks of the disease, which is not harmful to humans, has already been reported in almost every region of mainland China.

“China is going to deal with this African swine fever for many years to come,” OIE Deputy Director General Matthew Stone told Reuters in an interview on the sidelines of the 87th General Assembly of Paris-based organization.

Beijing has said its breeding herd is 22% smaller than this time last year, but many in the industry say the impact of the disease could be much greater.
African swine fever has spread to Vietnam, Cambodia and Mongolia and Stone said there was a significant danger that the virus could reach other Asian countries in the coming months...
....MUCH MORE

And from Hellenic Shipping News, May 31:

Brazil May soybean exports fall 2% on year on China swine fever: Conab
Brazil’s May soybean exports fell to 10 million mt, down 2% year on year, Brazilian national crop agency Companhia Nacional de Abastecimento (Conab) said Thursday, as an outbreak of swine fever in China hit demand.

“African swine fever outbreak in China is the primary reason for the year-on-year decline in May soy exports,” Conab said.

China is the largest buyer, taking over 75% of Brazilian soybean exports during January-April, Brazilian economy ministry data show.

The ASF outbreak in China started last August and has a 100% mortality rate for pigs, agricultural consultancy JCI China said.

ASF has led to significant decline in pig feed across China as sow and hog inventories deplete, a monthly US Department of Agriculture report said. China’s Ministry of Agriculture and Rural Affairs has acknowledged that the ASF situation remained serious, the report said.

“The pig herd in China has declined by 20% due to ASF and China’s feed demand and soybean imports are projected to fall dramatically from earlier forecasts,” the USDA said.
Soybean is processed into soy meal, which is used as animal feed.

“China imported 34.8 million mt of soybeans during the first half of the 2018/19 marketing year (October-September), a 7.8 million mt reduction as compared to average imports during the first half of the previous two years,” the USDA said.

“Low international beans prices and port premiums were the additional reasons for declining Brazilian soybean exports in May” Conab said....MORE