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China’s hog inventory falls 32% in July

Scott Olson_Getty Images News hogs huddled together at hog farm
Country makes another U.S. pork purchase after canceling purchase at end of July.

China’s Ministry of Agriculture & Rural Affairs (MARA) reported Aug. 16 that its hog inventory levels fell 32.2% in July compare to July 2018 as the result of the continued spread of African swine fever (ASF). A survey of hog farms in 400 counties also showed the sow inventory declined by 31.9% in July, the agency said. Both numbers showed a significant decline even from the June data and revealed total hog inventory down 25.8% and sow numbers down 26.7%.

The latest data may more closely reflect what many industry stakeholders and analyst have been suggesting, but the U.S. Department of Agriculture's Foreign Animal Service (FAS) recently reported that extensive interviews with the industry in China as well as price dynamics for live animals and feed have revealed that the true number of ASF outbreaks "far exceeds" the number MARA has reported to the World Organization for Animal Health.

The U.N. Food & Agriculture Organization recently reported that since MARA confirmed its first ASF outbreak in Liaoning province on Aug. 3, 2018, 149 ASF outbreaks have been detected. More than 1.16 million hogs have been culled in an effort to halt further spread, the report said.

FAS noted, however, that while reports contain the minimum required information (e.g., location, date, number of animals culled, etc.), they generally do not include epidemiological information.

“Each outbreak is reported as a new outbreak, with no linkage information related to the index farm. In other words, based on the available information, it appears China is treating each outbreak as if it were the first appearance of ASF in the particular area, even when the outbreaks seem to be within close temporal and physical proximity,” the report explained.

Currently, FAS is estimating losses in 2019 in a range from 10% to as much as 70%. As of right now, China's total herd inventory is estimated to see a 21% decrease in 2019, from 428 million head to 340 million head. FAS also estimates a further 10% decrease to the hog inventory in 2020.

China buys more U.S. pork

China recently made another pork purchase from the U.S., but the question is whether it will actually transpire. According to USDA export data, the country purchased 10,211 metric tons of U.S. pork Aug. 2-8 for shipment in 2019. However, China halted all U.S. farm product purchases on Aug. 5 as trade negotiations soured between the two countries.

At the end of July, China cancelled an order it had made for 12,222 mt of U.S. pork. China also cancelled 2,500 mt of U.S. pork for 2020.

Will Sawyer, lead animal protein economist for CoBank, recently told Feedstuffs that it will likely be a couple of months before China’s increased demand may start showing up.

“We really underestimated China’s ability to identify the shortfall in supply. Millions of tons of pork have been put in freezers all across the country,” he explained.

In fact, Sawyer said some have suggested that the total amount the U.S. produces is what China has in storage today, although “what that is, in reality, we will never know.”

He added that China's "ability to wait before they start buying volume in the way that we think they’re going to need to is going to be longer and may take longer than we originally thought.”

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