WEEKLY EMEA PORK WRAP: EU trade agreements under scrutiny amid new pork duties from China

The EU pork market faced a challenging environment in the week beginning Sept. 1 due to China's provisional antidumping duties on EU pork exports, ranging from 15.6% to 62.4%, exacerbated by the ongoing African swine flu outbreaks, particularly in Germany and Estonia. The situation in North Rhine-Westphalia has deteriorated, with the outbreak count rising to 118 by late August.

Geopolitical tensions have also influenced the market, as Russian President Vladimir Putin criticized Western sanctions impacting Russia's economy. His visit to China from Aug. 31 to Sept. 3 highlighted the increasing pork exports to China, Russia's largest trading partner, as both countries push back against what they call "discriminatory" sanctions.

Production updates

The ASF situation in Estonia has led to severe repercussions. Infections were confirmed on two additional farms, including the country's largest pig farm, resulting in the culling of 27,000 animals. The Ekseko farm, housing 27,832 pigs, was also confirmed infected, leading to over 55,000 pigs culled in the country this summer. This is particularly significant for Estonia, which had about 280,000 pigs at the end of July.

Italy is experiencing a notable decline in slaughterhouse activity, leading to a meat shortage. Despite differing views on breakeven pricing between producers and slaughterhouses, the overall market trend remains stable. In Latvia, the Food and Veterinary Service confirmed the fourth ASF outbreak this year on a pig farm housing 4,900 pigs, with three other outbreaks documented since May. The ongoing ASF outbreaks have raised concerns about the domestic swine populations across the region.

Consumption trends

In Spain, supply constraints continue, with low weights contributing to a sluggish pace of slaughter. However, normalization in slaughterhouse operations is expected as the holiday season concludes, although bearish market conditions may persist.

The German pork market remains balanced with no reported surpluses and stable prices, with expectations for potential recovery in the coming weeks. Belgium mirrors this outlook, showing a relatively balanced market despite slight increases in weights.

In the Netherlands, uncertainty surrounds the impact of government programs aimed at reducing livestock numbers. Over 1,000 farmers have signed up for state phase-out programs, but the extent of the decline in the animal population remains uncertain.

Pricing analysis

The Great Britain Standard Pig Price was recorded at 207.94 p/kg, reflecting a weekly increase of GBP0.18 but a year-over-year decline of GBP2.14. The UK specification SPP stood at 204.40 p/kg, up GBP0.19 week over week and down GBP2.09 year over year, according to AHDB.

In Germany and Belgium, prices remained stable, with expectations for a potential recovery in the German market.

Meanwhile, in the Netherlands, uncertainty regarding the impact of government programs continues to affect pricing dynamics, particularly for pig farmers.

Key events

The European Commission presented proposals for the ratification of the EU-Mercosur Association Agreement and the EU-Mexico Modernised Comprehensive Agreement.

The EU's Copa-Cogeca expressed strong disapproval of China's preliminary antidumping duties on EU pork exports, which range from 15.6% to 62.4% based on cooperation levels during the investigation. The fallout from these tariffs is expected to extend beyond direct exports, exerting pressure on EU internal pork markets, particularly as US pork products become more available in the EU. Antonio Tavares, chair of Copa-Cogeca's Working Party on Pigmeat, emphasized the need for the EC to rethink its trade policy to protect EU producers.

Additionally, Putin's visit to China highlighted Russia's strengthening trade ties, particularly in pork exports, amid Western sanctions.

The Celtic Pig initiated a new marketing channel with the first shipment of 50 piglets to Portugal, targeting the hospitality sector.

An independent study commissioned by The Wildlife Trust revealed concerning levels of intensive pig production in the UK, with significant concentrations in certain regions.

Outlook

The outlook for the EU pork market remains cautious as the ramifications of ASF outbreaks continue to unfold.

The culling of infected animals in Estonia and the production challenges in Italy and Spain are likely to tighten supply, potentially leading to higher prices in the short term.

The imposition of antidumping duties by China on EU pork exports could strain European producers, especially those reliant on the Chinese market.

Furthermore, as the EU navigates trade agreements, balancing domestic production needs with international trade relations will be crucial.

The pork sector is expected to adapt to evolving regulatory frameworks aimed at reducing environmental impacts, which will influence production strategies and market dynamics. Stakeholders must remain vigilant as market conditions evolve in response to both internal and external pressures, particularly concerning ASF and geopolitical developments.

Platts, part of S&P Global Energy, assessed the EU Pork Marker, FCA Barcelona at Eur3,780/mt on Aug. 8, down Eur10/mt week over week.