Report Highlights:

Fresh and chilled/frozen pork consumption in Hong Kong is forecast to maintain a stable level in 2015 and 2016, however, fluctuations in re-export demand could influence overall import levels. The U.S. was the 6th by volume and 3rd by value largest supplier of pork products to Hong Kong in 2014.

Summary

Domestic production is expected to be stable, rising slightly to 140,000 MT (1,727,000 head) and 142,000 MT (1,732,000 head) in 2015 and 2016, respectively. Although the wholesale price of live pigs in the first quarter of 2015 was below the comparable period last year, the average January – September prices are about 9 percent above 2014 prices.

Hong Kong consumption of freshly slaughtered pork is forecast to rise 1 percent over 2014 to 140,000 MT in 2015. For chilled/frozen products, Hong Kong imports (excluding re-exports) are projected to reach 355,000 MT in 2015, with a modest rise of about 2 percent compared to 2014. As re-export sales demand influences overall imports, sluggish re-export trade to mainland China in the early half of the 2015 has shown an upswing since July which may lift the overall pork imports in the second half of 2015.

Production

Hong Kong producers provide approximately 6 percent of domestic supply with the import of live pigs from Mainland China providing the remainder of domestic stocks. On average, China supplies 4,400 live pigs to Hong Kong daily. Domestically-raised pigs are comparatively heavier than Chinese-raised pigs, averaging 96 kg versus 80 kg, respectively. Domestic production is expected to be stable, rising slightly to 140,000 MT (1,727,000 head) and 142,000 MT (1,732,000 head) in 2015 and 2016, respectively.

Movement of prices for live pigs in Hong Kong is closely tied to that of mainland China. For example, the wholesale price of live pigs in Hong Kong in the first quarter of 2015 was below the comparable period in 2014, but began to recover in the second quarter as hog prices in China, began to improve. If hog prices in China continues to rise, Hong Kong supplies may be negatively impacted as more sales take place within mainland China instead of exports to Hong Kong.

Hong Kong: Supply and Consumption of Live Pigs, in Number of Head

2011

2012

2013

2014

2014/2013 percentage

Change

2015

Estimates

Local Supply

92,959

97,477

96,488

87,432

-9%

88,000

Imports

1,464,211

1,540,756

1,575,810

1,624,926

3

1,640,000

Total

1,557,170

1,638,233

1,672,298

1,712,358

2

1,728,000

Hong Kong: Average Wholesale Prices of Live Pigs, in US$/MT

2012

2013

2014

2014

2015

% change

Jan - Aug

Live Pigs

2,829

2,871

2,678

2,607

2,828

8.5%

Consumption

Hong Kong is a mature market where pork consumption outranks that of beef and poultry. Hong Kong's pork consumption in 2015 and 2016 is forecast to rise slightly (2 percent) each year to reach 495,000 MT and 504,000 MT, respectively.

Fresh pork is primarily utilized for household consumption while chilled/frozen pork is primarily used by the catering industry. In 2014, fresh pork accounted for about 34 percent of pork consumption in Hong Kong, up from 31 percent in 2013. Fresh pork sales benefitted from two factors in 2014 – First, lower hog prices in China brought Hong Kong prices down below 2013 levels, and avian influenza consequences, which reduced supply and raised poultry prices – encouraged consumers to substitute to lower-priced pork, thus raising overall pork demand.

Hong Kong: Consumption of freshly slaughtered pork vs chilled/frozen/processed pork

Year

Freshly slaughtered

Chilled/frozen/processed

Total

2012

132,618 (29%)

318,628 (71%)

451,246

2013

135,328 (31%)

306,799 (69%)

442,127

2014

138,388 (34%)

266,920 (66%)

405,308

Note: Chilled/frozen/processed pork is not in carcass-weight

Retail prices of fresh pork prices from January – August 2015 have remained stable compared to the corresponding period in 2014. However, through the end of 2015 and into 2016 if retail fresh pork prices rise, consumers may substitute toward lower-cost chilled/frozen pork products. Nonetheless, substitution to other fresh meat products, such as chicken or beef, is unlikely to be significant due to relatively higher prices.

Trade

Imports

- Pork

Hong Kong imported 269,911MT of pork products in the first three quarters of 2015 at a value of $795 million. The import volume and value declined by 18 percent and 17 percent, respectively (tables 5 & 6) over 2014 in response to prolonged challenges in re-exports that left inventory high and diminished additional orders. Reportedly, Hong Kong's cold storage was near capacity in early 2015 until re-exports began to pick up again in late July.

The U.S. ranked 6th by volume and 3rd by value in pork supplies to Hong Kong. In the first three quarters of 2015, U.S. pork exports to Hong Kong reached 15,581 MT at a value of $51 million. The export volume and value declined year-on-year by 27 percent and 32 percent, respectively (tables 5 & 6) due to sluggish re-export demand. U.S. pork sales to Hong Kong in the second half of 2015 are forecast to improve if re-exports to mainland China resume at a normal pace.

U.S. chilled meats accounted for 0.6 percent of all U.S. pork exports to Hong Kong at a value of $324,890 from January – September 2015. Frozen pork accounted for $33 million (65 percent) of all U.S. pork exports to Hong Kong in the same period of 2015.

Offals

From January-September 2015, Hong Kong imported $523 million in offals, a drop of 24 percent compared to the same period in 2014, due to challenges in re-export trade. The U.S. is the largest supplier of swine offals to Hong Kong by value. From January – September 2015, U.S. exports of offals to Hong Kong amounted to $166 million, far exceeding the export value of pork ($51 million). Export volume and value rose by 42 percent and 7 percent, respectively (tables 12 & 13), in response to lower prices. The average price dropped over 25 percent from $2,947/MT to $2,207/MT triggering the significant rise in sales as competitor prices, Germany, Brazil and Netherlands, remained higher.

Other Suppliers

China and Brazil are the two largest pork suppliers to the Hong Kong market, with a market share of 30 percent and 20 percent respectively, in terms of volume.

In 2015, China's pork exports to Hong Kong are likely to be affected by intense demand and rising pork prices in its domestic market. From January – September 2015, China's pork exports to Hong Kong declined by 6 percent in volume but increased by 2 percent in value. However, China still accounted for about 93 percent (by volume) of the chilled pork market in Hong Kong. The chilled pork from China attracts a different market segment from that of the U.S. and Australia and is used as a substitute for freshly slaughtered meat in households. Currently, China has four plants that are eligible to export chilled meat to Hong Kong. China is also the key supplier of whole piglets for roasting. For other cuts, China faces strong competition from suppliers such as Brazil.

The demand in Hong Kong domestic market for Brazilian pork has been increasing and is expected to continue through the end of 2015 or as long as prices of Chinese pork remain high. From January – September 2015, the average price of Brazilian pork declined 9 percent year-on-year whereas the average price of Chinese pork rose by 9 percent. The catering industries have been substituting Chinese pork for Brazilian because the qualities are comparable and the cuts similar. Along with U.S. pork products, Brazilian pork exports to Hong Kong might perform better in the second half of 2015 if re-exports to China continue to rebound.

(Re) Exports

From January – September 2015, Hong Kong pork re-exports accounted for 25 percent of total imports compared to 42 percent in the same period in 2014. Vietnam remains the largest export market with 65 percent of the market share in 2015 by volume but re-exports declined by 40 percent year-on-year from January – September 2015. Re-exports to the Philippines and Thailand spiked in recent months but remain insignificant.

Re-export hurdles to mainland China for pork imports which had driven Hong Kong trade down by 51 percent (January-September), began picking up in July and may lift Hong Kong's overall pork imports by year's end.

Policy

In the past year, Hong Kong has not introduced any new measures/regulations that impact U.S. pork exports to Hong Kong.

The Hong Kong Food Safety Center monitors products for 44 drugs, including seven prohibited1, and 37 restricted veterinary chemicals which are listed on Public Health (Animals and Birds) (Chemical Residues) Regulation (Cap. 139N). Among 50,000 samples from swine, cattle, goats and chickens in 2014, no prohibited chemicals were detected. Paylean is a registered drug in Hong Kong (approved in 2007) and is allowed for use in swine feeds. Ractopamine is not an issue in Hong Kong.

Hong Kong: Pork Imports in Volume, MT

Partner Country

Year To Date

Market

2012

2013

2014

09/2014

09/2015

%Change

Share

World

413,748

443,712

442,016

327,545

269,911

-17.6

100%

China

91,354

102,942

115,168

87,600

82,065

-6.32

30%

Brazil

89,449

91,997

77,661

59,289

53,934

-9.03

20%

Germany

34,767

28,467

38,263

29,132

21,096

-27.59

8%

Spain

37,066

43,020

31,808

23,170

11,563

-50.09

4%

Poland

16,591

19,528

29,504

19,589

16,596

-15.28

6%

United States

27,099

29,538

28,059

21,255

15,581

-26.69

6%

Netherlands

27,365

32,491

23,743

16,499

14,192

-13.98

5%

Italy

14,168

17,567

15,340

11,142

6,511

-41.56

2%

France

10,030

11,000

11,923

8,169

3,671

-55.06

1%

Hong Kong: Pork Re-exports in Volume, MT

Partner Country

Year To Date

Market

2012

2013

2014

Sep-14

Sep-15

%Δ 15/14

Share

_Total

94,942

136,715

174,886

137,711

67,125

-51.26

100%

Vietnam

24,468

81,887

94,838

72,583

43,749

-39.73

65%

Taiwan

19,686

35,245

43,527

39,412

0

-100

0%

China

38,815

7,891

20,637

14,857

11,578

-22.07

17%

Macau

10,940

11,453

14,704

10,659

11,135

4.47

17%

Philippines

4

0

933

0

244

n/a

0%

Thailand

69

29

153

126

373

196.41

1%

Hong Kong: Chilled Pork Imports in MT

Partner Country

Year To Date

Market

2012

2013

2014

Sep-14

Sep-15

%Δ 15/14

Share

_Total

11,725

9,670

8,995

6,859

6,834

-0.36

100%

China

11,271

9,114

8,367

6,382

6,366

-0.25

93%

Australia

146

154

180

132

151

14.1

2%

Canada

73

111

115

79

107

34.74

2%

Thailand

62

107

95

77

7

-90.69

0%

United States

95

80

62

51

43

-15.89

1%

United Kingdom

1

11

49

49

1

-98.68

0%

Brazil

0

27

47

47

90

91.44

1%

Hong Kong: Frozen Pork Imports in MT

Partner Country

Year To Date

Market

2012

2013

2014

Sep-14

Sep-15

%Δ 15/14

Share

_Total

235,952

227,685

229,344

169,117

163,624

-3.25

100%

Brazil

81,873

82,660

68,726

52,900

49,070

-7.24

30%

China

40,294

44,309

52,584

39,401

41,981

6.55

26%

Germany

29,500

23,648

32,846

25,210

17,654

-29.97

11%

Netherlands

22,190

26,370

18,358

12,890

10,780

-16.37

7%

United States

17,392

13,731

15,741

11,664

11,957

2.51

7%

Vietnam

9,059

8,568

7,654

6,000

6,584

9.74

4%

Poland

1,375

2,014

7,546

3,350

6,436

92.11

4%

Hong Kong: Processed Pork Imports in MT

Partner Country

Year To Date

Market

2012

2013

2014

09/2014

09/2015

%Change

Share

World

166,072

206,357

203,676

151,569

99,452

-34.38

100%

China

39,788

49,519

54,216

41,817

33,718

-19.37

34%

Spain

30,621

35,587

25,024

18,938

7,051

-62.77

7%

Poland

15,216

17,515

21,957

16,239

10,160

-37.43

10%

Italy

12,469

16,727

14,898

10,993

5,759

-47.61

6%

United States

9,611

15,728

12,256

9,540

3,582

-62.46

4%

Russia

2,130

5,258

10,144

7,362

8,925

21.22

9%

France

8,459

8,444

9,330

6,491

1,717

-73.55

2%

Brazil

7,577

9,311

8,887

6,342

4,773

-24.74

5%

Hong Kong: Offal Imports by Suppliers, in MT

Partner Country

Year To Date

Market

2012

2013

2014

09/2014

09/2015

%Change

Share

World

338,603

359,811

479,101

319,506

278,114

-12.96

100%

Germany

94,153

88,065

116,964

86,175

46,744

-45.76

17%

United States

43,934

54,852

88,785

52,740

75,096

42.39

27%

Netherlands

44,426

58,703

54,541

38,962

24,463

-37.21

9%

Brazil

43,241

38,403

43,710

31,584

27,574

-12.7

10%

Poland

10,918

7,857

39,752

21,841

23,582

7.97

8%

Spain

15,409

21,258

28,315

16,409

17,484

6.55

6%

U.K

21,875

20,201

21,617

15,153

11,677

-22.94

4%

Belgium

16,069

18,228

17,703

12,455

9,119

-26.79

3%

Italy

10,113

9,979

14,274

9,529

7,731

-18.88

3%

Meat, Swine

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Hong Kong

USDA Official

Old Post

New Post

USDA Official

Old Post

New Post

USDA Official

Old Post

New Post

(Units)

Slaughter (Reference)

0

0

0

0

0

0

0

0

0

(1000 HEAD)

Beginning Stocks

0

0

0

0

0

0

0

0

0

(1000 MT CWE)

Production

138

138

138

140

140

140

0

0

142

(1000 MT CWE)

Total Imports

347

350

347

360

360

355

0

0

362

(1000 MT CWE)

Total Supply

485

488

485

500

500

495

0

0

504

(1000 MT CWE)

Total Exports

0

0

0

0

0

0

0

0

0

(1000 MT CWE)

Human Dom. Consumption

485

488

485

500

500

495

0

0

504

(1000 MT CWE)

Other Use, Losses

0

0

0

0

0

0

0

0

0

(1000 MT CWE)

Total Dom. Consumption

485

488

485

500

500

495

0

0

504

(1000 MT CWE)

Ending Stocks

0

0

0

0

0

0

0

0

0

(1000 MT CWE)

Total Distribution

485

488

485

500

500

495

0

0

504

(1000 MT CWE)