THE USDA Foreign Agricultural Service maintains an attaché in Beijing under its Global Agricultural Information Network and part of its brief is to produce an annual assessment of commodity and trade issues in China's livestock and products sector.
That report was published last Thursday and contains an interesting perspective on pork and beef production, consumption and associated import implications.
The first point about the report is that it makes no mention of the decimation of China's pig herd in 2018-2019 due to African Swine Fever which was the principal driver of the surge in import demand for alternative proteins including beef.
Furthermore it makes no mention of China's claim in late 2020 to have largely rebuilt its pig herd or of the implicit consequence of that claim in the upsurge of pork supply in the first half of 2021.
Rather the report attributes this year's oversupply of domestic pork and eye-watering plummet in price to recurrent ASF outbreaks in the provinces of Henan, Sichuan and Shandong.
The outbreaks were claimed to have "resulted in a rush to sell off hogs at all stages of maturity including underweight, standard weight and overweight hogs".
Accordingly the report does not see this oversupply development as part of the recovery process back to more normal herd levels.
Instead it argues that the low prices and consequent lack of profitability in the pig production sector in 2021 will delay the rebuilding process.
Without actually saying as much, the report suggests that the massive drop in pork prices in 2021 is really just a production blip and that there is no wider trend to a more normalised level of supply just yet.
The report also concludes that restocking will be impacted by the intervention activities of China's planning and regulatory bodies.
In June 2021, China's National Development and Reform Commission (NDRC) made several pre-emptive warning announcements about excessive live pig and pork price drops and then on July 7 announced its intention to purchase frozen pork from the market.
The NDRC has not published a specific floor price as the trigger for this intervention.
Rather it used break-even ratios of pig price to feed price as the mechanism.
At 6:1 ratio NDRC warned the market that price was reaching break-even.
At 5:1 it acted to intervene and place the frozen pork purchased into state reserves.
The report suggests that NDRC may be inclined to manage future rises in pork price in a similar fashion. Ratios exceeding 9:1 may be the trigger for intervention by way of price controls.
This latter control on pork price increases is likely to act as a disincentive for small and medium scale operations in the extent to which they re-engage with the industry after the debilitating loss of profitability suffered in 2021, according to the report.
Together with lower piglet inventories and a smaller sow herd resulting from elevated slaughter and delayed restocking in 2021, the report concludes that 2022 pig production will decline by 5 per cent.
Mainly due to fewer pigs reaching market weight, the resultant decline in pork production in 2022 is expected to be 14pc.
Far from seeing domestic pork supply improving and taking some demand pressure off imported beef, the report predicts China will need to increase its pork imports in 2022 to 5.1 million tonnes (CWE).
As to its predictions for beef consumption and imports, the report is upbeat.
The dramatic expansion of beef consumption in 2020 and 2021 is expected to continue in 2022.
This growth will be driven by additional expansion into second and third tier cities where consumers have the ability and willingness to pay high prices for beef.
Development of cold-chain logistics and infrastructure into a greater number of China's cities will support chilled beef consumption albeit concentrated in the HR sector while at-home consumption will take time to build.
But the report does concede that beef remains a luxury and novel protein source for Chinese consumers. Pork remains as China's preferred meat.
The only other reference to the interchange in demand between pork and beef comes almost as an afterthought in the second-last paragraph of the report.
It says, "However, the price of beef compared to other domestically consumed animal proteins will be a limiting factor for consumption by households across a broad range of economic levels."
Having already concluded the recovery in domestic pork supply is still some distance away, the report is consistent insomuch that it expects beef demand to remain strong.
Domestic beef production however is expected to remain flat with China's National Bureau of Statistics forecasting a 1.8 to 4.5pc increase at its 2021 Agricultural Outlook Conference.
Similarly, the report does not expect any gain by way of imports of live cattle with that trade stable at around 350,000 head.
The conclusion therefore is that beef imports will continue to rise in 2022, albeit at a lower rate of growth.
The forecast is for 3.3m tonnes (CWE), up from an expected 3.1m in 2021.
Unbelievable! Bullocks 504c and cows 450c at Vic saleyards
TUESDAY'S sales at Wodonga and Camperdown rewrote the record books this week.
It might still be a little early for the usual good runs of bullocks that come through the Wodonga yards so there were only a couple of decks on offer.
Top price was 504c/kg which equates to around 930c/kg dressed weight.
Previously we have seen 554c for trade steers at Wagga but cannot find anyone who can recall over 500c for bullocks.
Similarly the 450c paid for meatworks cows at Camperdown is a yard record. That puts them at around 880c or better DW.
The acute shortage of cattle driving these rates in the south has seen several southern operators active in Queensland markets.
Grid rates remain unchanged at 710-715c for 4-tooth ox and 655c for heavy cow in southern and central Qld with works still getting five days at this stage.