Swine PS&D

Animal Numbers, Swine

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Japan

USDA Official

New post

USDA Official

New post

USDA Official

New post

Total Beginning Stocks

9,685

0

9,537

9,537

9,400

9,520

Sow Beginning Stocks

900

900

885

885

880

885

Production (Pig Crop)

17,350

17,350

17,100

17,100

17,000

17,050

Total Imports

1

1

1

1

1

1

Total Supply

27,036

17,351

26,638

26,638

26,401

26,571

Total Exports

0

0

0

0

0

0

Sow Slaughter

0

0

0

0

0

0

Other Slaughter

16,936

16,936

16,470

16,202

16,550

16,400

Total Slaughter

16,936

16,936

16,470

16,202

16,550

16,400

Loss

563

563

768

916

551

671

Ending Inventories

9,537

9,537

9,400

9,520

9,300

9,500

Total Distribution

27,036

27,036

26,638

26,638

26,401

26,571

1000 HEAD, PERCENT

Pork PS&D

Meat, Swine

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Japan

USDA Official

New post

USDA Official

New post

USDA Official

New post

Slaughter (Reference)

16,936

16,936

16,470

16,202

16,550

16,400

Beginning Stocks

214

0

195

195

229

246

Production

1,309

1,309

1,273

1,264

1,279

1,280

Total Imports

1,223

1,223

1,320

1,332

1,275

1,254

Total Supply

2,746

2,532

2,788

2,791

2,783

2,780

Total Exports

1

2

1

2

1

2

Human Dom. Consumption

2,550

2,549

2,558

2,543

2,552

2,540

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

2,550

2,549

2,558

2,543

2,552

2,540

Ending Stocks

195

195

229

246

230

238

Total Distribution

2,746

2,746

2,788

2,791

2,783

2,780

1000 HEAD, 1000 MT CWE, PERCENT, PEOPLE, KG

Quantities listed in the text are made on the basis of Carcass Weight Equivalent (CWE) unless specified otherwise. Some numbers in the tables are on a product weight basis and have not been converted to CWE.

Rates of conversion from product weight to CWE are:

Pork Cuts (Boneless) – 1.30

Processed/Prepared Pork Products – 1.30

Pork

2014 Production, Market and Trade Situation Summary:

Despite high overall market prices, Japan's 2014 total pork consumption was estimated only marginally below the 2013 level at 2.543 million MT, while total supply grew two percent on increased imports, which were up nine percent at 1.332 million MT. Import growth more than offset reduced domestic production, which was down three percent at 1.264 million MT.

Concerns over major Porcine Epidemic Diarrhea virus (PEDv) outbreaks in Japan and in North America (especially the United States) and high prevailing U.S. pork prices contributed to the acceleration of Japanese import diversification efforts in 2014. Buyers imported greater volumes of Canadian and Mexican chilled pork and EU (notably Danish) frozen pork at the expense of U.S. pork volumes, reducing 2014 U.S. market share of total imported pork cuts by five percentage points to 33 percent. Sources indicate that uncertainties over lingering impacts of PEDv outbreaks on U.S. pork supplies and over the impact of Russia's import ban on EU pork fueled speculative purchases of frozen pork for processing and for food service in 2014, driving year ending stocks up an estimated 26 percent to 246,000 MT.

Losses from PEDv Drove Down Domestic Hog Slaughter in 2014

Japan's 2014 total hog slaughter was down four percent from 2013 at 16.2 million head and total pork production was reduced three percent to 1.264 million MT. As 2014 unfolded, the extent of PEDv's impact on piglet numbers proved greater than initially anticipated in 2013 (see note 2), halting two successive years of industry expansion.

Note 2: Japan's reported cases of PEDv and subsequent piglet losses peaked in the fall of 2014. According to MAFF's monitoring record, for the period between October 2013 and August 2014, there were 817 reported cases of PEDv outbreaks in 38 out of 47 prefectures, in which 403,761 head out of 1,272,331 total infected animals died. From September 2014 to March 9, 2015, there were 153 reported cases of PEDv in 24 prefectures, in which 26,856 died, and morbidity fell 10 percentage points to 22 percent.

Total Pork Imports Outpaced Total Demand in 2014

Japan's 2014 total pork and products imports grew nine percent from 2013, reaching 1.332 million MT, more than filling the gap created by reduced domestic pork production. Increased imports of chilled and frozen cuts (up 12 percent combined to 1.077 million MT) outpaced moderately lower imports of prepared products (mostly North American seasoned ground pork), which were down three percent at 254,272 MT.

Imports of chilled pork, which mainly go to the Japanese retail market for in-home consumption, were moderately higher at 390,075 MT, accounting for 36 percent of total pork cuts imported in 2014. Imports of U.S. chilled pork were down five percent at 244,022 MT as U.S. export offers climbed to historically high levels in 2014, largely driven by reduced slaughter (due to PEDv losses), and relatively solid demand in the United States and international markets. In the face of tight domestic and U.S. chilled supplies, imports from Canada (up 16 percent at 131,439 MT) and Mexico (up 33 percent at 14,552 MT) prevented a possible supply shortfall of chilled retail cuts.

Imports of frozen pork, which are mainly used by domestic meat processors to manufacture processed/prepared pork products and to a lesser extent by the food service sector, were noticeably higher in 2014, up 19 percent at 688,121 MT, partly on speculative purchasing in early 2014 fueled by PEDv-related fears of tighter U.S. exportable supplies. However, Russia's import bans on EU pork in 2014 (first in February 2014 due to African Swine Fever (ASF) followed by the August 2014 EU-wide import ban in retaliation for Ukraine-related sanctions) created sizable stocks of exportable EU pork, a large fraction of which found its way to the Asian market in 2014 (see note 4).

In 2014, the EU captured an unprecedented 59 percent share of Japan's imported frozen pork cuts market, as imports from Denmark rose significantly, up 19 percent at 175,947 MT, while imports from other EU countries skyrocketed up 59 percent to 230,005 MT, capturing an additional eight percentage points of market share. Imports of U.S. frozen cuts rose seven percent over 2013 levels to 114,821MT (17 percent market share), while imports of Canadian frozen cuts were down 15 percent to 60,982 MT, dropping Canada to fourth place (behind Denmark, the United States and even Mexico) for the first time.

Speculative buying brought Japanese pork imports within a hair's breadth of the safeguard trigger levels over the first two quarters of Japanese fiscal year 2014 (The Japanese fiscal year runs from April through the following March; the pork safeguard volumes are calculated cumulatively over the course of the Japanese fiscal year ). The pace of imports slowed and safeguard concerns tempered considerably in the wake of the Russian EU-wide pork ban, which alleviated the tight supply concerns among Japanese traders. Import purchasing patterns also responded to reports of Japanese economic contraction in the latter half of 2014 and to the considerable stockpiles of imported frozen product accumulated earlier in 2014.

Note 3: In 2014, the prices for U.S. frozen picnic and shoulder cuts, the principle raw materials for manufacturing sausage and other ground processed pork products in Japan, reportedly soared to an unprecedented level, driving the price of seasoned ground pork, which is subject to a 20 percent ad valorem duty, to similar heights. According to trade sources, the increase in imports of U.S. frozen cuts in 2014 may be partially due to increased importation of "unseasoned ground pork," which may have been used to balance the cost of shipments under the gate price system. As such, imports of U.S. seasoned ground pork fell five percent to 159,283 MT in 2014.

Note 4: While exports to Russia reportedly accounted for 60 percent of total EU pork exports in the first half of 2013 (at 332,000 MT), Russia's share plunged to six percent (at only 19,000 MT) over the same period of 2014 as a result of Russia's ASF-related import ban in February 2014. Increased Russian imports of Canadian and Brazilian pork during the first half of 2014 were reportedly incapable of filling the gap left by banned EU supplies. In the absence of EU pork, as well as Canadian and U.S. pork following the August 2014 Ukraine-related import bans, Brazil has made substantial inroads into the Russian market according to Japanese industry press reports.

2014 Consumption Remained Solid Despite Higher Prices

Reduced domestic production kept the average market price of pork throughout 2014 much higher than 2013 levels. However, further yen depreciation pushed retail prices of imported pork higher, narrowing the traditional price gap. On continued relatively solid retail demand, Japanese household expenditures on pork increased significantly in 2014, while purchased volumes fell marginally. Household consumption of processed meat products (ham, sausage, and bacon) was dragged down by a series of price hikes throughout 2014 (as a result of higher imported raw material costs due to the weaker yen) coupled with the three-percentage point consumption tax hike implemented in April 2014.

2015 Pork Market Outlook

2015 Total Pork Consumption Level to Remain Unchanged

Japan's 2015 total pork consumption is projected to stay roughly unchanged from the previous year at around 2.54 million MT. Prospects for increased supplies and distribution of chilled retail pork are expected to improve through the end of 2015, following the late February 2015 resolution of the prolonged U.S. West Coast ports labor dispute and the substantial tapering of Japan's domestic PEDv outbreaks in late 2014 / early 2015, (see Note 5). As increased distribution tempers upward price pressures, Japan's household pork consumption may expand moderately in 2015. Lower market prices may similarly enhance the 2015 outlook for pork utilization in the food service sector, where imported (largely frozen) cuts tend to dominate (see Note 6). However, despite reduced procurement costs for frozen pork cuts for processing use (as global prices moderate on increased production), overall consumption of processed products in Japan may remain somewhat sluggish in the face of additional food price hikes (in response to nascent inflationary pressure in the overall Japanese economy), potentially offsetting moderate consumption increases in retail and food service sectors.

Note 5: Long arrival delays for chilled meat and offal shipments as a result of the U.S. West Coast ports labor dispute, the effects of which emerged in the last quarter of 2014 and which persist despite the late February 2015 resolution, caused a significant disruption of imported chilled pork supplies. While official numbers are not yet available, sources indicate that Japan's 2015 first quarter imports of U.S. chilled pork could have fallen by as much as 20 – 25 percent compared to 2014. Japanese retailers reported difficulty securing supplies of imported chilled cuts in the first quarter of 2015. Unable to secure sea freight, some major Japanese importers resorted to air freighting scheduled shipments of U.S. chilled pork at considerable additional expense to sustain long-time retail customer loyalty. Some retailers even reportedly resorted to selling thawed, previously frozen European cuts.

Note 6: Despite Japan's improved production prospects for 2015, the February 2015 average wholesale carcass price in Tokyo soared 33 percent higher year-on-year (excellent grade at 625 Yen per kg and medium grade 599 yen per kg), on tight supplies of imported fresh/chilled cuts and slower than expected recovery of Japanese domestic slaughter. Post anticipates that 2015 domestic pork prices will fall below 2014 levels for the remainder of the year as Japanese slaughter picks up and imported supplies begin to flow more freely.

Annual Domestic Pork Production Forecast to Recover Slightly in 2015

As reported PEDv cases have noticeably fallen in 2015 after peaking in the fall of 2014, Japan's 2015 domestic hog slaughter is anticipated to recover modestly in 2015, projected at around 16.4 million head (or total pork production of 1.28 million MT). While slaughter numbers in early 2015 continue to show the lasting effects of 2014 piglet losses to PEDv, Post anticipates that slaughter pace will accelerate in the latter half of 2015. For the above projection, Post assumed Japan's 2015 year beginning national sow inventory to be the same level as 2013 (885,000 head). (Note: The national livestock inventory as of February 1, 2015, will be published in July 2015 and reported in the August 2015 Livestock and Products Annual Report.

Total Pork Imports to Decline from 2014 Heights

Post projects that by June 2015, imports of chilled U.S. pork should recover from the worst of the effects of the West Coast ports labor dispute, though the supply disruption's lasting impact may be evident in U.S. chilled pork market share for years to come. Coupled with a rebound in domestic production, the Japanese retail market is expected to be flush with both domestic and imported fresh/chilled table pork at prices significantly lower than 2014 levels. Supported by expanded supplies and lower prices, chilled pork is expected to attract additional protein consumption market share as prospective demand for imported beef looks to remain soft, as tight supplies and higher prices are anticipated to continue through 2015. Meanwhile, Japan's import demand for raw material frozen pork is expected to remain static in 2015, as 2014 processed pork product price hikes continue to temper prospects for further growth.

Through the first quarter of 2015, it appears that sizable 2014 year end stocks have effectively buffered Japanese end-users from the worst impacts of the U.S. ports-related supply disruption. However, significantly improved U.S. pork production prospects in 2015 will likely reignite pitched competition with EU suppliers for greater shares of the market for raw material frozen cuts for processing use, assuming the EU will continue to have significant exportable stocks as the Russian import ban persists through August 2015. Lower U.S. pork prices in 2015 are expected to result in the resumption of Japan's recent import of substantial volumes of seasoned ground pork, as the attractiveness of unseasoned ground pork in calculating the gate price dissipates at lower price levels.

On the anticipated recovery of Japanese domestic production, the unwinding of significant year beginning frozen stocks, and in light of the above, Post projects Japan's 2015 total pork imports will be down five percent from the previous year to 1.254 million MT, with year ending stocks also down modestly at 238,000 MT.

Monthly Ending Pork Stock Estimate YTD

Unit: Metric Ton (CWE Basis)

Month/Year

2012

2013

% Chg.

2014

% Chg.

Jan.

232,219

227,915

-2%

213,346

-6%

Feb.

238,564

229,814

-4%

209,024

-9%

Mar.

237,673

226,928

-5%

210,978

-7%

Apr.

231,592

226,129

-2%

213,498

-6%

May

234,878

231,345

-2%

229,268

-1%

Jun.

219,436

224,888

2%

244,787

9%

Jul.

222,686

219,863

-1%

266,367

21%

Aug.

228,799

217,903

-5%

274,021

26%

Sept..

233,068

211,461

-9%

275,977

31%

Oct.

234,993

209,986

-11%

286,718

37%

Nov.

229,995

198,884

-14%

264,953

33%

Dec.

213,918

195,273

-9%

245,651

26%

Source: ALIC Monthly Statistics

Japanese Total Pork Import, Chilled and Frozen Cuts Combined/CIF Price YTD

Partner Country

Quantity (Metric Ton, Customs Clearance Basis)

Share (%)

% Change

2014/2013

Jan./Dec.

2012

2013

2014

2013

2014

Jan./Dec.

Jan./Dec.

Jan./Dec.

Jan./Dec.

Jan./Dec.

World

778,804

738,451

829,382

100%

100%

12%

United States

313,860

281,144

276,033

38%

33%

-2%

Canada

172,614

142,241

148,016

19%

18%

4%

Denmark

116,742

113,951

135,346

15%

16%

19%

Mexico

45,630

59,379

63,041

8%

8%

6%

Chile

28,918

29,522

26,847

4%

3%

-9%

EU (Other than Denmark)

100,336

111,579

176,973

15%

21%

59%

Others

704

635

3,126

0%

0%

392%

Source of Data: Global Trade Atlas (Japan Ministry of Finance)

Partner Country

Unit Value(United States Dollars/Metric Ton)

% Change

2014/2013

Jan./Dec.

2012

2013

2014

Jan./Dec.

Jan./Dec.

Jan./Dec.

World

6,584

5,414

5,226

-3%

United States

6,564

5,404

5,356

-1%

Canada

6,580

5,397

5,252

-3%

Denmark

6,577

5,379

5,027

-7%

Spain

6,809

5,604

5,210

-7%

Mexico

6,610

5,462

5,410

-1%

Chile

6,577

5,418

5,173

-5%

Netherlands

6,548

5,323

4,955

-7%

Hungary

6,623

5,535

5,032

-9%

Austria

6,609

5,335

5,020

-6%

France

6,595

5,458

5,045

-8%

Germany

6,534

5,333

5,023

-6%

Ireland

6,620

5,386

4,976

-8%

Italy

6,743

5,598

5,232

-7%

Poland

6,572

5,413

5,124

-5%

Brazil

0

5,350

4,824

-10%

Finland

6,573

5,368

5,210

-3%

Australia

7,008

5,884

5,541

-6%

Belgium

6,623

5,442

5,079

-7%

Sweden

0

0

4,979

N.A.

Source of Data: Global Trade Atlas (Japan Ministry of Finance)

Japanese Pork Import, Prepared and Processed Products/CIF YTD

Partner Country

Quantity (Metric Ton, Customs Clearance Basis)

Share (%)

% Change

2014/2013

Jan./Dec.

2012

2013

2014

2013

2014

Jan./Dec.

Jan./Dec.

Jan./Dec.

Jan./Dec.

Jan./Dec.

World

190,030

202,189

195,594

100%

100%

-3%

United States

116,612

129,339

122,525

64%

63%

-5%

China

30,909

25,079

26,279

12%

13%

5%

Canada

15,227

18,344

20,486

9%

10%

12%

Thailand

8,309

8,386

6,840

4%

3%

-18%

Netherlands

203

2,191

4,535

1%

2%

107%

Mexico

5,812

5,419

4,297

3%

2%

-21%

Others

12,958

13,431

10,632

7%

5%

-21%

Source of Data: Global Trade Atlas (Japan Ministry of Finance)

Partner Country

Unit Value(United States Dollars/Metric Ton)

% Change

2014/2013

Jan./Dec.

2012

2013

2014

Jan./Dec.

Jan./Dec.

Jan./Dec.

World

4,249

3,857

4,279

11%

United States

3,386

3,279

3,810

16%

China

5,956

4,920

4,835

-2%

Canada

3,237

2,819

3,413

21%

Thailand

8,632

8,150

8,463

4%

Mexico

3,607

3,956

4,142

5%

Netherlands

2,822

2,578

3,174

23%

Source of Data: Global Trade Atlas (Japan Ministry of Finance)