Following the upward trend in 2019, the Chinese red meat import market rose in the first part of 2020. Despite the COVID-19 pandemic and the resulting weak demand for red meat, especially in the catering sector, China imported 2,074,128 tons of red meat and 656,344 tons of red meat. total offal from January to June, with an interannual expansion of 153. 3% and 33. 2% respectively.
It seems that the decline in demand for red meat intake has not cast a shadow on the Chinese red meat import market at all. The volume of red meat imports in the first six months of this year exceeded that of the full year in 2019. This can be simply attributed to the decrease in pork production in the first part of 2020 due to the effects of ASF and the decrease in red meat. costs in foreign markets during the same period.
As the graph below shows, China’s red meat import volume has stubbornly held up in the first six months of this year. Especially for this month of March and April, the annual expansion rate reached 201. 9% and 185. 6% to 384,015 tons and 389,891 tons respectively.
Externally, the immediate surge in US red meat exports to China from January to June is another main driving force behind the boom in Chinese red meat import volume. China completely imported 407,896 tons of red meat and 130,061 tons of red meat offal from the United States in this period, expanding at 503. 3% and 85. 6% on an annual basis, respectively.
Unlike the United States, Canada lost almost part of its market share to other exporters of red meat and offal from January to June. As shown in the table above, Canadian red meat exporters suffered a sharp decline in the 4 months from September to December 2019. The main explanation is that Canadian red meat factories were suspended for export to China due to counterfeiting of the attached certificate of veterinary fitness. to red meat products since June 25, 2019. Although the ban was lifted on November 5, 2019, it continues to have a significant effect in the first part of 2020. Among all red meat exporters, Canada recorded the rate of expansion in the lowest in red meat (35. 8%) and the highest rate of decrease in red meat offal (-24. 2%) from January to June. Meanwhile, its grade on red meat and offal also fell from 3rd to 6th.
When African swine fever (ASF) erupted and spread since late 2018 in Asia, European and American red meat manufacturers considered the virus to be very serious. They have used each and every means to protect their plants from ASF. However, for COVID-19, some manufacturers are letting down their guard, placing more importance on its effects on red meat intake than on the chain of origin of the entire red meat industry.
While many employees at European and American meat factories have tested positive, more and more red meat manufacturers have had to restrict or suspend operations since April. To make matters worse, the COVID-19 virus was discovered in the cutting boards used for imported salmon in Xinfadi, Beijing’s largest agricultural wholesale market, in late June. Therefore, China has introduced large nucleic acid tests not only for personnel working in rainy markets, but also for samples of imported seafood and meat products.
In addition, more than 40 meat processing factories suspended exports to China as of June, either proactively or passively. Of those factories, 61% are those that export red meat to China, while the rest are for the export of beef, poultry and lamb.
Geographically, the prohibited list includes 15 countries, 47% from Europe, 20% from South America, 13% from North America and Oceania respectively, and 7% from Central America. However, when assessing the upcoming effects, it is not the number of banned factories on the mainland that plays the decisive role, but their market share in China.
Of the banned red meat factories, the suspension of German factory 202 and Dutch factory 28 had more effects on the Chinese red meat import market than on other exporters, due to their higher export volume and visitor base to fashion in China.
Although the Chinese red meat import market as a whole is booming to an unprecedented level, the functionality or value evolution of each imported red meat product is different from all the others, especially from this one. month. Of March.
Pork heads with ears stood out among all products in the Chinese red meat import market at the end of August, with a maximum annual expansion rate of 91%. The main driving force is the much lower head inventory point than ever. As the graph above shows, pig heads collapsed in November and December last year, resulting in a loss of at least 30% for importers and wholesalers by one point higher. Also, when the market rallied in June, they cautiously followed the pre-sale strategy, with almost no action. The hog head shortage intensified as demand for heads from the processing and catering industries increased, causing the head value to hit an all-time high.
Unlike the heads, the bones of the humerus behaved poorly during the same period. Even in a bull market, its value fell another 23. 3% at the end of August. Although this product followed a similar trfinish to early level buds, their divergence occurred in June. This can be basically attributed to the low demand for humerus bones, part of its only channel in the restoration industry and more, geographically concentrated in some eastern and southern provinces. As a result, the stacked inventory went down in value.
However, not all bone products had a downward trend. Taking the sternum as an example, its value rose sharply to 77. 1% in August, compared to last August. Growth points include: 1). recipes and channels for restaurants and supermarkets; two). Fleshy sternum bones can simply update ribs or ribeye when the value of the latter is increasing; 3). Less sternum bone from foreign factories this year.
Looking at the long-term Chinese red meat import market, the following key points would influence its balance between supply and demand in the coming months:
On the one hand, the significant easing in domestic red meat production has boosted red meat imports from China. As a result, the import volume of pork in the first part of 2020 exceeded the total volume of the full year in 2019. For the moment, part of 2020, the domestic production of red meat is expected to recover, but it will still be below the general level. at the end of this year.
Additionally, from January to early September, a total of 540,000 tonnes of frozen red meat stock was released to local markets in 31 batches to reduce the value of red meat. Even compared to the full year 2019, the volume released in the first 8 months of this year increased by 285. 7%. More importantly, based on your last batch production date, it can be assumed that there is still enough or giant inventory of frozen red meat to be released in the remaining months of this year, bad news for the market. to import.
On the other hand, since COVID-19 is now well behind in China, red meat intake in restaurants, schools and businesses is also beginning to recover vigorously. In addition, the next 3 most important festivals in China (Mid-Autumn Festival and National Day in September and October, Spring Festival in December and next January) will also particularly spice up the national red meat intake.
However, a recent national crusade against food waste may slow this expansion somewhat, when consumers are encouraged to order or cook fewer dishes to waste. Also, a big wild card is when COVID-19 can be well controlled around the world and if there would be a wave for now in the future.
To sum up, in China’s rapidly-changing pork import market 2020, it is the best of times for those correctly appraising the situation; it is the worst of times for those missing the boat.
As reported by Angela Zhang
For more data and insights related to China’s pork market, please contact the author [email protected] or subscribe at IQC Insights here.
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