SWINE

Production

China's swine herd is forecast to decline to 420 million head, a 5 percent decrease from USDA's official forecast due to market oversupply, the exit of small operations and a lack of government financial incentives.

Current herd liquidation to negatively impact 2015 production

Hog producers have been hit hard by low pork prices and high feed prices. The hog to corn price ratio has remained below the profitability breakeven indicator of 6:1 for almost all of 2014. As a result, producers are significantly reducing their sow herds. The extended period of losses has drained farmers' cash reserves, forcing them to cull sows.

Disease outbreaks have put further pressure on pork production. In December 2014, China Central TV reported a large outbreak of foot and mouth disease (FMD) in Jiangxi province.

FMD outbreaks were also reported in Hubei, Hunan, Tianjin and Liaoning in 2014.

Although the breeding herd is shrinking, its quality is improving due to imported genetics and industry consolidation. The central government is encouraging the development of large scale swine farms. These farms usually have better technology and management skills, resulting in higher sow body weight.

PORK

Production

Supplies is basically unchanged from 2014

2015 pork production is forecast at 56.1 million tons, 2.2 percent lower than USDA's official forecast and almost unchanged from 2014. Higher body weight helped offset a decline in slaughter. Continually improving genetics combined with expected lower feed prices and higher pork prices will promote slaughter at heavier weights to maximize profitability. As a result, the estimated slaughtering weight is increased from 100kg to 120kg

The government stock purchasing program has little impact on the market as the volumes are insignificant. The program generates more of a psychological effect than an actual market impact. The pork sector tends to view the government's purchase price as the lowest market price. The government is expected to intervene by purchasing pork for government reserves if the market price shifts lower.

Consumption

Consumption will increase slightly in 2015

2015 consumption is forecast at 57.2 million tons, 2.0 percent lower than USDA's official forecast. The economic slowdown and changing diets are the main causes behind the sluggish growth. Preserved pork products used to be very popular in southern China, but media campaigns have raised consumer health concerns over these products. Consumption in urban areas has been negatively impacted by increased consumer interest in low-fat diets. Urban consumers are also paying more attention to feed safety, resulting in growing popularity of branded pork. However, branded meat distributed through hypermarkets/supermarkets and specialty stores in the major cities of Beijing, Shanghai and Guangzhou remains a small niche market. Pork prices are expected to increase in 2015, which will also help dampen consumption growth.

Imports

2015 imports are forecast at 1,200,000 tons, 20 percent higher than USDA's official forecast. Imports from European Union countries will continue to grow and China opens market to more European Union countries. Imports from United States will decrease though. Even the United States is still the second largest pork exporter to China; its market share is shrinking.

A strong dollar has made U.S. pork more costly than meat from competing European countries. Many meat packers also curtailed their exports to China due to China's zero tolerance for ractopamine, a feed additive that promotes lean muscle growth in swine.

China maintains this ban despite the establishment of a Codex standard, and scientific evidence indicating that ractopamine can be used safely. European Union countries do not use beta agonists such as ractopamine, and now account for more than 60 percent of pork exports to China. Hungary recently became the 15th country granted access to China's pork market.

Exports

2015 exports are forecast at 300,000 tons, up nine percent from 2014 on stronger demand from Hong Kong and Russia. China hopes to increase the number of plants eligible to ship to Russia from the current two to ten in 2015.

Swine PS&D Table

Animal Numbers, Swine

2013/2014

2014/2015

2015/2016

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

China

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Total Beginning Stocks

475922

475922

474113

474113

475000

465830

(1000 HEAD)

Sow Beginning Stocks

50500

50500

50000

50000

46500

45500

(1000 HEAD)

Production (Pig Crop)

720971

720971

727000

729927

689500

672000

(1000 HEAD)

Total Imports

24

24

3

7

5

7

(1000 HEAD)

Total Supply

1196917

1196917

1201116

1204047

1164505

1137837

(1000 HEAD)

Total Exports

1680

1680

1750

1750

1825

1825

(1000 HEAD)

Sow Slaughter

0

0

0

0

0

0

(1000 HEAD)

Other Slaughter

719605

719605

723000

735100

722000

715000

(1000 HEAD)

Total Slaughter

719605

719605

723000

735100

722000

715000

(1000 HEAD)

Loss

1519

1519

1366

1367

1180

1012

(1000 HEAD)

Ending Inventories

474113

474113

475000

465830

439500

420000

(1000 HEAD)

Total Distribution

1196917

1196917

1201116

1204047

1164505

1137837

(1000 HEAD)

CY Imp. from U.S.

0

0

0

0

0

0

(1000 HEAD)

CY. Exp. to U.S.

0

0

0

0

0

0

(1000 HEAD)

Balance

0

0

0

0

0

0

(1000 HEAD)

Inventory Balance

-1809

-1809

887

-8283

-35500

-45830

(1000 HEAD)

Inventory Change

2

2

0

0

0

-2

(PERCENT)

Sow Change

2

2

-1

-1

-7

-9

(PERCENT)

Production Change

2

2

1

1

-5

-8

(PERCENT)

Production to Sows

14.3

14.28

14.5

14.6

14.8

14.77

(PERCENT)

Slaughter to Inventory

151

151

152

155

152

153

(PERCENT)

Slaughter to Total Supply

60

60

60

61

62

63

(PERCENT)

TS=TD

0

0

0

0

0

0

Pork PS&D Table

Meat, Swine

2013/2014

2014/2015

2015/2016

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

China

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Slaughter (Reference)

719605

719605

723000

735100

722000

715000

(1000 HEAD)

Beginning Stocks

300

300

350

350

375

375

(1000 MT CWE)

Production

54930

54930

56500

56710

57350

56100

(1000 MT CWE)

Total Imports

770

770

810

761

1000

1200

(1000 MT CWE)

Total Supply

56000

56000

57660

57821

58725

57675

(1000 MT CWE)

Total Exports

244

244

275

276

300

300

(1000 MT CWE)

Human Dom. Consumption

55406

55406

57010

57170

58250

57200

(1000 MT CWE)

Other Use, Losses

0

0

0

0

0

0

(1000 MT CWE)

Total Dom. Consumption

55406

55406

57010

57170

58250

57200

(1000 MT CWE)

Ending Stocks

350

350

375

375

175

175

(1000 MT CWE)

Total Distribution

56000

56000

57660

57821

58725

57675

(1000 MT CWE)

CY Imp. from U.S.

0

0

0

0

0

0

(1000 MT CWE)

CY. Exp. to U.S.

0

0

0

0

0

0

(1000 MT CWE)

Balance

0

0

0

0

0

0

(1000 MT CWE)

Inventory Balance

50

50

25

25

-200

-200

(1000 MT CWE)

Weights

76

76

78

77

79

78

(1000 MT CWE)

Production Change

3

4

3

3

2

-1

(PERCENT)

Import Change

5

5

5

-1

23

58

(PERCENT)

Export Change

4

4

13

13

9

9

(PERCENT)

Consumption Change

3

4

3

3

2

0

(PERCENT)

Imports Percent Consumption

1

1

1

1

2

2

(PERCENT)

Exports Percent Production

0

0

0

0

1

1

(PERCENT)

Population

1349585838

1349585838

1355692576

1355692576

1361512535

1361512535

(PEOPLE)

Per Capita Consumption

41.1

41.1

42.1

42.2

42.8

42

(KG)

TS=TD

0

0

0

0

0

0