One of the hottest current topics in agricultural markets is African swine fever, a virus ravaging the Chinese hog industry. Market concerns abound, from whether the virus can spread to other regions globally (such as the U.S.) to its potential impact on pork production and consumption in China and elsewhere.

Currently there is no cure for African swine fever (although many are working on it). The virus itself is resilient. It can remain viable in processed pork products for over a year and can last in frozen pork products for years. The virus does not pose a threat to humans, so consumers of pork need not worry about “catching” the virus through the consumption of pork products.

China is the largest hog producer and pork consumer in the world. By the end of 2018, China’s hog inventory was estimated near 440 million head. With so much of China’s production coming from small family farms, it’s challenging to get a handle on the true impact of African swine fever in the country. However, analyst estimates of hogs killed by the disease or culled to prevent its spread ranges from 20 to 40 percent of China’s inventory.

Indicating how bad the situation is, China purchased 27,000 MT of U.S. pork in March despite the tariff China imposed on U.S. imports, and shipments are expected to grow to hundreds of thousands of tons in the coming months, regardless of the tariff, just based on China’s need for pork. The U.S.’s ability to pick up export demand for pork could be the make-or-break factor for whether soy complex prices get some bullish support. A rise in U.S. pork exports would support the continuation of strong crush and greater soybean meal demand domestically.

A 3-D illustration of the African swine fever virus

Posted by: Information Services
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