Disease Hits Demand

Effects from African swine fever may reduce China's soybean needs.

China’s first case of African swine fever was found in Shenyang, Liaoning Province, in northeast China, Image by Dan Davidson

More reports of African swine fever in China have caused panic in the country’s hog industry, as well as among pork consumers in China. If the disease continues to spread, it could also reduce feed demand and lower the soybeans China imports.

The first case of the disease was found in Shenyang, Liaoning Province, in northeast China on Aug. 1, which led to 913 hogs being culled. After that, four more cases were reported in middle-China’s Henan, Jiangsu, Zhejiang and Anhui provinces in August. The disease causes high fever, loss of appetite, hemorrhages and death in two to 10 days. Mortality rates may be as high as 100%.

The situation appears to be getting worse, as more cases have been reported recently. At press time, the total reported number of outbreaks had jumped to 13, with four happening in one day on Sept. 6.

“Most of the African swine fever cases were in northeast China and east China,” says Dongping Lu, a purchasing manager for Yangxiang Stock Co. “Northeast China is the largest soybean- and corn-producing area, close to Russia, while east China is one of the most developed areas, as well as the main hog-producing and pork-consuming area.” Yangxiang Stock Co. is one of the largest feed and hog companies in southeast China’s Guangxi Province.

NATIONAL FOCUS. The outbreak and spread of the disease has also gotten the attention of China’s Ministry of Agriculture. “There was no African swine fever reported in China before. We are sure this disease was introduced from other countries,” says Gongmin Wang, deputy director of the Animal Husbandry and Veterinary Bureau at the Ministry of Agriculture. “There are many ways that could bring the disease to China, such as transportation methods, imported cargos, as well as human travel.”

Pork consumers are worried about the impact of the disease on human health. Local consumers say the price of pork is lower because of the panic. Nationally, the average pork price is down 7%, to RMB 13.20 (renminbi, China’s official currency) per kilogram (kg) ($0.88 per pound) at the end of August from RMB 14.20 per kg ($0.93 per pound) at mid-month, according to the Ministry of Agriculture.

Wang assured Chinese consumers they have nothing to fear from the disease. “African swine fever is not a zoonotic disease and will not affect food safety,” he said during a press conference in Beijing. A zoonotic disease is one that can be transmitted from animals to people.

PRODUCTION PRESSURE. Lu says some hog-processing companies have recently been slowing down their slaughtering and keeping hogs in stock for more days because of unfavorable pork prices.

“But, they could not hold them for a long time, as feed consumption will increase,” Lu says. “So, in the short run, soymeal demand may increase as those extra long-term hog stocks will consume more feed.”

In the long run, though, the impact on soymeal demand may be just the opposite. “We do not know whether the government can control the disease or not, so it is too early to estimate the impact on the hog industry and feed industry,” Lu says. “But, this will definitely reduce feed demand and impact China’s soybean imports.”

Suifeng Duan, first soybean industry chain analyst for the Ministry of Agriculture, says China may decrease its soybean imports by more than 10 million metric tons (367 million bushels) in the 2018–19 crop year.

China’s hog industry normally builds up stocks after October, as hog farmers prepare for the holiday season. Those animals will be ready for market during the New Year’s season in January and Chinese New Year’s season in February. However, fears of African swine fever will likely cut stocks in the upcoming livestock production season, which, in turn, will reduce feed demand.

“The decrease in feed demand will reduce the demand of soybean meal in the feed industry,” Lu explains.

After China applied a 25% tariff on U.S. soybeans in retaliation for tariffs that the Trump administration placed on Chinese products, Chinese crushing plants had stopped buying new-crop U.S. soybeans. The market is expecting old-crop soybean imports will dry up around December. If China does not import more U.S. soybeans, the government will have to release its strategic reserve to meet domestic demand. If so, soybean meal demand could be very tight at the end of the year.


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