Porto Alegre, April 18, 2024 – On the 11th, the US Department of Agriculture (USDA) released a report on the meat sector globally, and there were some important changes in the data on China. The big point is that China will continue to have a large supply and in a difficult economic environment throughout 2024, impacting consumption, which should result in little interest in imports, a scenario that will prevent a major adjustment in Brazilian domestic availability this year. Brazil will need to further expand sales to other markets to achieve this objective. As previously mentioned, Brazilian pork has a very attractive price, which should help sales, but the USA will be a major competitor this year, which could impede greater expansion.
Returning to China, USDA pointed to pork production in 2024 at 55.95 mln tons, a drop of 3.43% compared to 57.94 mln tons last year, however, there was a positive adjustment of 750 thousand tons over the January estimate. This year’s production will fall, but the domestic supply carried over from last year to now was high, weighing on the entire chain. China has a large amount of frozen meat in state stocks, and at some point it will be made available on the market.
Consumption in the country is a complicating factor, with household confidence reduced in the face of economic uncertainty. There is a major crisis in the country’s real estate sector, which could generate other internal crises and slowdowns in activity. The Chinese government has been expanding stimulus packages, such as in the credit market, but such measures take time to have the desired effects. USDA pointed to Chinese consumption at 57.725 mln tons, a reduction of 3.37% compared to 59.741 mln tons in 2023.
Given the production and consumption figures, the need for imports in comparison to last year has not increased, in addition, USDA significantly adjusted downward the January estimate. For this year, the Department pointed to pork imports from China at 1.875 mln tons, down 1.16% from 1.897 mln tons in 2023. In January, USDA had pointed to 2.250 mln tons for 2024.
For China’s pig herd at the end of 2024, USDA pointed to 416 mln head, a reduction of 4.20% compared to the end of 2023, which stood at 434.22 mln head. The matrix herd at the beginning of 2024 was estimated at 41.2 mln head, the same number reported in January. The Chinese government reduced the country’s breeding target to 39 mln head, which tends to be reached over the next few months.
The data lead us to believe that the Chinese market will be more adjusted in 2025, with a leaner herd and production, with a possibly more favorable economic scenario. In 2025, prices should reach healthier levels, potentially stimulating imports a little. However, a point to be analyzed is that even with a smaller herd of matrices, Chinese productivity has grown compared to a few years ago, with advances in professionalization, the result of significant investments that have occurred since the crisis generated by African swine fever between 2018/2019. Thus, imports may even increase next year, but not sharply.
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