Despite two years of a slight slowdown, 2017 looks to show positive gains in world pig production. According to Food and Agriculture Organization of the United Nations (FAO) projections, global pork production is expected to grow in 2017 to nearly 120 million metric tons (mmt). The FAO estimates that 2016 pork production was about 116.5 mmt, a slight drop in comparison to the 117.2 mmt produced in 2015.
The data gathered by Pig International shows that 2016 world pork production was lower than in the previous two years, with a 1.3 percent drop from 2015 to 2016 and a 1 percent drop from 2014 to 2016. However, compared to world pork production in 2011, 2016 production was up nearly 7.5 percent. Compared to 2006, world pork production was up 12 percent in 2016.
A stable market
According to Rabobank, the 2017 global pork market is relatively stable. An oversupply in the Americas is being absorbed by continued strong Asian imports, supporting pork prices across the globe, although those prices vary by region. Consumers should be the biggest beneficiaries of lower prices due to high supply and competitive markets.
The USDA calculates that smaller markets, like Australia, Colombia and the Philippines, will import more pork this year.
The United States Department of Agriculture (USDA) estimates that pork exports will gain 5 percent in 2017. The European Union (EU) continues as the top exporter, thanks to demand from China. Chinese pork imports will remain at historically high levels as domestic production remains low.
Mexico will increase imports thanks to lower U.S. pork prices and strong processing demand, while shipments to Japan and South Korea will be relatively stable. Imports to Russia will fall as that nation increases its domestic production.
On the plus side, the USDA calculates that smaller markets, like Australia, Colombia and the Philippines, will import more pork this year.
One of the most consistent points made by swine market analysts is the fact that sows are producing more piglets. That means that a smaller sow herd does not necessarily equate to less pig production. As the U.S. swine industry data for 2016 show, with 1 percent more sows than in 2015, they produced 4 percent more pigs than a year earlier. Therefore, while higher output per sow may be great for producers, it causes national production tonnage to keep rising even when sow numbers stand still or decline.
Based on an FAO report from October 2016, the regional distribution of swine production is: Asia-Pacific 56.36 percent, Europe and Russia 24.36 percent, North America (U.S. and Canada) 11.52 percent, Latin America 6.59 percent and Africa 1.17 percent.
In 2014, the regional distribution was: Asia-Pacific 58 percent, Europe and Russia 24 percent, North America (U.S. and Canada) 11 percent, Latin America 6 percent and Africa 1 percent.
The regional changes in production in the last two years have seen Asia drop by 1.5 percent, while North America and Latin America have each grown by 0.5 percent. Europe with Russia and Africa have basically remained the same.
China: importer supreme
China, as the world’s largest pork producer and importer, was the country with the largest swine production drop in 2016, producing less than in all the previous years since 2012. The drop from 2015 to 2016 was almost 3.5 percent, while in 2016 China produced nearly 1 percent less pork than it did in 2012.
The USDA notes that China’s herd size fell by 25 million pigs between 2012 and 2015. In 2017, Chinese pork production is expected to drop again, but only marginally, with the industry finding some stability.
USDA data shows that China ended 2016 with a 38 million head sow herd, which should result in domestic pork production of 51 mmt in 2017, down from nearly 53 mmt in 2016. China’s sow herd fell to low levels in 2016 due to large-scale culling as a result of low pork prices. China’s sow herd in 2015 was 47 million head.
Low Chinese production does have a positive impact on the pork exporting nations, particularly the EU and the U.S. China, as the world’s top pork importer, with record-setting imports in 2016, is expected to account for over 25 percent of global trade in 2017. The EU gets the biggest benefit of China’s imports, accounting for a 70 percent market share. The U.S. represents 17 percent of China’s pork imports.
EU: exports create high prices
In March 2017, Eurostat published the swine production statistics for the EU-28, showing that the EU pig population dropped 1 percent to 147.3 million head compared to one year ago. The sow herd fell by 1.6 percent in the last year.
Since March 2016, swine production grew almost 5 percent in Poland, 3.6 percent in Ireland and 3 percent in Spain. On the negative side, swine production fell in Hungary 7.6 percent, Slovakia dropped 7.3 percent while the Czech Republic fell 4.9 percent. France, Denmark and the Netherlands also had significant reductions of their pig populations, while Belgium and Germany also saw reductions, although not as steep as other countries.
According to official estimates, pork production in the EU will only see small gains as the domestic market remains weak. However, the EU is seeing much higher pig prices in 2017 than it did a year ago. As 2017 started, the only healthy looking trend in world swine industry came from Europe.
EU exports set a record in 2016, thanks to Chinese demand for pork. In 2016, according to USDA statistics, the EU accounted for 37.5 percent of the world’s pork trade.
While the EU will benefit from the strong export demand, exports are a wild card, since high prices can limit competitiveness and returns.
USA: oversupply
The U.S. is expected to see growth in 2017 since demand at home and abroad is improving, despite ending 2016 with some oversupply of pork.
According to the USDA, on December 1, 2016, the sow inventory was 6.09 million head, 1 percent higher than in December 2015. For that same period, the market hog inventory of 65.4 million head was up 4 percent from the year before.
However, by March 1, 2017, those numbers had gone down by about 1 percent from the previous quarter, but were still 4 percent higher than on March 1, 2016. U.S. pork prices were in freefall at the start of 2017, but the official projections are for significant growth by the end of the year, with exports forecast up 8 percent to a record 2.6 million tons.
U.S. pork continues to face strong competition in China from the EU, but lower pork prices should result in higher shipments to Mexico, South Korea and Colombia. In 2016, U.S. pork exports represented 28.5 percent of the world trade, down from 2015.
Brazil: slow growth
Brazil continues to grow its swine herd to meet increased export demand as domestic demand slowly improves, despite a short-term crisis at the start of 2017 regarding food safety practices at some meat processing plants. Brazil ranks fifth in world pork production, behind China, US, Germany and Spain. Brazilian exports accounted for 10 percent of the world’s pork trade in 2016.
According to Rabobank, exports remain the key for the Brazilian pork industry, given the expected 3 percent production increase, which points to a positive 2017. Balanced supply and rising exports, combined with the expected decline in feed costs, will support production and exports in 2017.
Russia: meeting demand
The USDA forecasts that swine numbers in Russia will increase 2.2 percent to 22.335 million head by the end of 2017. Pork production in 2017 is expected to rise by less than 1 percent to 2.98 mmt.
The top pork producers continue investing in the sector, shifting from production expansion to operational efficiency. Russia’s industrialized pork producers are nearing the ability to satisfy domestic demand, which means imports are expected to fall 13.5 percent in 2017.
Highlights from across the world
In Canada, the hog sector sees continued but moderate growth in 2017, having nearly reached record volumes. Pork exports are not expected to be as high as the record levels reached in 2016. Canada is the eleventh largest pork producer in the world, and its exports represented 16 percent of world pork trade in 2016, making it the third largest pork exporter in the world, behind the EU and the U.S.
Mexico increased its pork production in 2016 by 3.75 percent, according to official statistics. Pork exports increased 9.5 percent in 2016, with Japan being by far the largest market for Mexican pork. Mexican pork exports represented 1.7 percent of the world’s trade in 2016. Mexico is the third largest importer of pork in the world, behind China and Japan. It is the top importer of U.S. pork.
Chile exports about 2 percent of the world’s pork. Since 2012, the sow herd has been steadily dropping and continued to do so in 2016, ending with 194,000 sows.
Thailand has too many sows for the volume of national pork market demand. Industry experts estimate that there were between 1.1 and 1.2 million breeding sows on farms in Thailand at the start of 2017. However, the requirement at present is for no more than 950,000 sows. The result is a relatively poor farm price that leaves only a low margin, especially for independent producers who are not linked to an integration.
South Korea’s sow herd is expected to continue to expand in 2017. The various estimates of sow herd size range from 974,000 to over a million head. The sow herd increased 1.6 percent in 2016 over 2015, while swine production grew 1.8 percent in 2016 compared to 2015.
According to published news reports in 2017, hog prices in Vietnam have fallen dramatically, which has resulted in a small drop in the pig herd, compared to this same period in 2016.
In other parts of Asia, Japan’s total hog slaughter increased modestly in 2016 to 16.393 million head, up 2 percent from 2015, lifting total production to 1.279 mmt, also up 2 percent. Philippine hog production grew almost 5.5 percent in 2016. In Taiwan, meanwhile, the 2016 hog population was 5.44 million head, down 1 percent from the year before.
According to the USDA, the major factor influencing pig production in Ukraine will remain the spread of African Swine Fever (ASF). Many new cases were discovered in households and among the wild pig population in 2016. However, no major pork producer was impacted by ASF. Swine producers reduced production and are concentrating on satisfying domestic demand. The pork production decreases are expected to slow by the end of 2017.
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