China's Jan ASF outbreak not a challenge to soybean demand recovery: sources

New Delhi — The resurgence of the African swine fever cases in China's Guangdong-based pig farms following the outbreak at a major pork producing company over January 20-22 is unlikely to pose a serious challenge to China's overall hog herd numbers, supporting the strong recovery in its soybean demand, industry sources told S&P Global Platts Jan. 28.

With the hog herd recovery on a swifter-than-expected curve, China's soybean demand has also been projected to hit record highs.

According to S&P Global Platts Analytics, the world's largest soybean purchaser is expected to import all-time high volumes of the oilseed in 2020-21 and 2021-22 marketing years (October-September) at 100 million mt and 110 million mt, respectively.

China is heavily dependent on soybean purchases as it processes over 80% of imported beans into animal feed.

ASF IN CHINA

As soon as the latest ASF virus strains of the January outbreak were discovered, hundreds of pigs were culled as a preventive step, reducing the chances of contagion, the sources said.

"Although the latest outbreak is not a serious issue in China at the moment, we need to watch how this develops in coming days because the resurgence of the epidemic in China will affect market sentiment badly, particularly when the swine production capacity has not yet recovered completely," Shanghai-based agricultural consultancy JCI China told Platts.

Since late 2019, China has been quick to implement strict quarantine measures whenever an ASF outbreak is discovered.

According to the Ministry of Agriculture and Rural Affairs, or MARA, six ASF outbreaks were reported in China in 2020, with the last having occurred in October. All the six outbreaks were dealt with quick quarantine measures and stricter inter-provincial transportation policies, MARA said.

As of Nov. 30, 2020, China's swine herd recovery was seen at 90% of the pre-ASF levels, and should this prevailing growth trend continue, the world's largest pork producer and consumer is likely to fully recovery in the first half of 2021, according to MARA.

The ASF first emerged in China in August 2018, which resulted in the loss of over 50% of its swine population. Following large-scale quarantine measures, over 200 million pigs were culled that year, leading to a massive shortage of pork in the country and record pork prices.

China's pig farming sector has experienced a rapid consolidation since late 2019 as small-scale farms were amalgamated into big entities under a government directive and over $30 billion invested in the consolidation, a Beijing-based consultancy said.

Over 15,000 large-scale pig farms resumed operations in 2020, with another 13,000 newly-built ones added into the production chain, an agricultural ministry official said.