China’s beef/beef variety meat imports set another record in July at 48,915 metric tons (mt), up 76 percent year-over-year. When combined with Hong Kong, however, total imports were down 11 percent to 88,093 mt as growth in direct imports did not fully offset the drop in Hong Kong’s volumes (39,178 mt, -45 percent and the lowest since 2012).
For January through July, China’s direct imports were up 25 percent to 243,419 mt while combined China/Hong Kong imports were down 2 percent to 639,135 mt. Australia, Argentina, Uruguay and New Zealand have been the big beneficiaries of the growth in China’s direct imports, while volumes from Canada also gained momentum this summer. Canada’s July export data showed 3,337 mt, up from less than 600 mt in the same month last year. China has climbed to the third-largest market for Canadian beef, trailing only the U.S. and Mexico. Brazil’s direct exports to China are also taking hold, with 11,404 mt shipped in July – the first full month of access for Brazilian beef.
Pork/pork variety meat imports remained unexciting in July at 144,864 mt, down 3 percent from a year ago. When excluding variety meat, however, the picture is a bit different. Although China’s direct pork muscle cut imports increased in June (61,740, +51 percent) and July (59,294 mt, +35 percent), growth was more modest when combined with Hong Kong. Combined June imports were up 29 percent to 74,339 mt, while July was up 18 percent to 68,417 mt – both monthly volumes closer to 2013 levels. January-July combined imports were up nearly 3 percent to 1.047 million mt, with China’s direct imports up 2 percent to 824,664 mt. In 2011, the last time China’s pork prices spiked, imports took off in August, so it will be interesting to see if imports surge again this year when August data is available.
China’s live hog prices have stabilized, holding relatively steady for the past four weeks, and last week averaged 18.21 RMB/kg or $1.29/lb, up 23.5 percent year-over-year based on Ministry of Agriculture data. Piglet prices continue to climb at $2.46/lb, up 42 percent, but both hog and piglet prices remain below 2011 levels. The hog:corn ratio is now 7.46:1, compared to about 8:1 at this time in 2011, but clearly indicating strong profitability as feed prices are decreasing while hog prices are increasing (although high piglet prices might slow the herd rebuilding process).
The spread between China’s hog prices and those in the U.S. and EU peaked in early August, reaching record levels. China’s prices are now about 2.24 times those in the U.S. and 2.31 times EU prices. U.S. and EU export data (and China’s import data) continue to show that the EU is reaping virtually all of the benefits of China’s pork deficit. EU first-half exports were led by China/Hong Kong (600,836 mt, up 11 percent), which accounted for 45 percent of total EU export volume. U.S. exports to the region were down 18 percent to 185,404 mt over the same period.