China’s pigmeat imports in 2017

The January issue of Whole Hog Brief presents a view and forecast of China’s pigmeat imports in 2016 and 2017. This Blog presents the short version of that article. The chart alongside illustrates how Chinese pork and pigmeat imports have grown in 2016. The latest trade figures (November 2016)  show that imports of pigmeat by China have doubled in 2016 compared with 2015. The two most “reliable” data series for the Chinese pig industry – kill numbers and deadweight prices – fit the narrative i.e. kill numbers are down, prices are up and, as might be expected, imports have risen. But how do we calculate the ongoing gap between domestic pig numbers (home supply) and “normal” domestic demand?

The trend in China’s hog slaughter numbers in recent years is currently running at a level of around 13% below the 2012-15 trend line (and, crucially, the downward trend in slaughter numbers is not flattening out yet). This represents a shortfall of around 2.3 million tonnes of pigmeat per annum i.e. this is an estimate of the likely average “gap” between domestic availability and demand in 2017. The “normal” demand for imported pigmeat was, in the years 2012-2015, around 1.4 million tonnes per annum. In which case the 2016 level of imports, estimated at around 3 million tonnes, is still 0.7 million tonnes below the level where “normal” import levels plus the expected gap in supply will satisfy domestic demand in 2017. That said, if domestic pork prices move sharply up (Avian Flu drives up pork demand?) and import prices follow them (via import supply issues and/or the actions of Chinese import agents and distributors) then domestic demand would decline or shift left and reduce the size of the hole that imports need to fill.    Whichever way prices move it looks like China’s pigmeat imports in 2017 will be at least as high as they were in 2016 – and probably higher.