What are the key factors that impact white meat supply and demand in different markets? Brett Stuart, President of Global Agritrends, analyzed these and other key questions related to the behavior of these products alongside leading Australian analyst, Simon Quilty.
Global pork forecasts
Stuart noted that by late 2021-early 2022, China will continue to be the main player as it continues to drive up the pork market. Pork industries on every continent, both established and emerging, continue their upward trend driven by the Asian giant’s demand. According to the analysts, growth has been considerable since 2018, both in volume and price, particularly for shipments from Brazil, Spain, and the United States. Stuart said: “what’s most impressive is that 10 years ago China was hardly on the radar as an importer, it was just another dot on the map; but as of 2015 it’s pork imports have grown exponentially. The same goes for chicken imports. Today, China is the second largest importer of this product, while three years ago it was at the bottom of the chart. The same happens with the rest of the meats, corn, and other products. Without a doubt, this Asian power will continue to set the pace of the global meat market as it currently is driving the world’s agricultural markets.”
One issue that the analysts indicated as a cause for concern is the presence of African swine fever (ASF) in the Americas, particularly after reports that more than 14,000 Haitians were crossing the Mexican border into Texas in recent weeks. “The health implications could be quite serious,” both experts emphasized.
Regarding pork production in China, its Ministry of Agriculture lowered its estimates to ensure supply and stabilize prices. The experts compared the dramatic drop in prices and the profits obtained between 2018 and 2021, both in steady decline, which explains the ministry’s effort to stabilize pork prices, a situation that Stuart considers imperative for the country right now. In spite of this, China keeps driving global markets for beef, pork, poultry, corn, and soybeans. Hence, it is expected for all major commodity markets to be driven by the Asian power by 2022.
What causes global markets to fluctuate
An issue that intrigues both experts are the 2022 GDP forecasts for various markets, which are not proportionate to the increase on Covid-19 immunizations in each country. For example, countries such as Australia, the United Kingdom, Brazil, and South Korea expect a GDP drop even though they have high vaccination rates; while countries such as Indonesia, Vietnam, and the Philippines expect a GDP boost despite their low vaccination rates. According to both experts, this proves that vaccination does not guarantee a steady GDP upswing, and that forecasts are more related to other underlying factors of the pandemic and the reality of each region and country.
With regard to the global food prices inflation, both Stuart and Quilty mentioned an article on The Economist that suggests that beyond the pandemic, other factors such as public policies in different regions of the world, reduced production capacity due to the lack of workers, and the increase in the production cost of food, fertilizers, energy, etc., are connected to this increase.
A relevant issue currently impacting the European market is the rise in gas prices in Great Britain that has impacted the food supply chain and particularly frozen meat, a situation that will likely translate into a turkey shortage for the Holiday season due to the lack of space for freezing. The experts believe that, although it is an extremely troubling issue, there is time to intervene and reduce the impact, not just for the market but also for the welfare of farm animals.
Additionally, Brett Stuart expressed his concern about the close relationship between fertilizers, electricity, and coal prices in Asia and China in particular, as the operation of the first two depends on this fuel. Stuart believes that some power outages could be particularly problematic if we consider climatization under extreme weather conditions, especially in summer as air conditioning is used more frequently. However, both specialists also see a positive aspect, as this represents an opportunity for the government to maintain and repair its systems, as well as broaden the range of energy sources.
In other news involving China, both experts pointed out that despite its differences with countries that have signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, China formally applied to join it. Signed in Santiago, Chile, in 2018, this free trade agreement includes Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam.