Foot and Mouth Disease shapes the future of European pork trade

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Heather:

Hello and welcome to the Platts Commodities Focus podcast. Today we will be talking about the impacts of animal disease on the EU pork sector and its potential repercussions to global trade.

My name is Heather and I'm the manager here at Commodity Insights for the North American Food and Agri Pricing team. I'm joined by my colleagues Sarah, Desire, and Samyak, and together we will be looking at trade flows and pricing on the international pork stage. Sarah specializes in protein on the Agri Research team. Desire covers the European pork market on the pricing side, and Samyak joins us from the News team.

Earlier this year, we saw a fresh outbreak of foot and mouth disease, which sent shock waves through the European livestock sector. Back in the early 2000s, we saw FMD present itself in the UK and around 6 million cows and sheep were slaughtered in an effort to control the spread. This was estimated to have caused an £8 billion economic loss to the country. The UK was able to get the disease under control despite another outbreak in 2007, but it's the recent cases reported in Germany which have brought FMD back into the spotlight and show just how devastating this disease can be to the farming community. The disease has now presented itself in Hungary and Slovakia, indicating that FMD is still a large risk for the EU. So Sarah, with foot and mouth disease now increasingly prevalent within Europe. Could you tell us a bit more about why the disease is so devastating and how it spreads?

Sarah:

You're absolutely right, Heather. Foot and mouth disease is causing quite a stir in the European agriculture sector right now, and it's devastating for the countries affected. So FMD is a highly contagious disease and impacts cloven-hoofed animals, so like pigs, cattle, and sheep, but it doesn't actually pose a threat to humans, as we cannot contract it. The virus can spread not just through direct contact of animals, but also via contaminated objects and even through the wind. This makes it incredibly challenging to contain once an outbreak begins.

Infected animals suffer from painful blisters in their mouth and their hooves, which lead to decreased milk protection, weight loss, and slower growth rates. While FMD isn't as deadly as something like African swine fever, it has significant economic implications due to the measures put in place to control the outbreak.

Under EU law, if a farm is found to be infected, all the cloven-hoofed animals on the farm are culled, regardless of whether they show symptoms or not. Sometimes even animals from neighboring are culled too. The mass culling obviously has a massive economic impact to the farm due to the loss of animals and production, in contrast to a disease like bluetongue where culling may not be involved and animals can recover.

Secondly, trade bans are a common measure put into place when FMD is found. When a country loses its FMD-free status, it essentially halts international trade, leading not only to production losses for the farms affected, but it also means access to international trade markets for the whole country go to a standstill, and we've seen this play out in Germany, particularly for the pork industry.

Heather:

It's interesting to see that even though FMD is so economically devastating, it doesn't necessarily pose a threat to humans. Desire, we've seen some pretty interesting shifts to trading patterns in response to the outbreaks this year. What has the recent case in Germany meant for trading patterns in Europe?

Desire:

That's right, Heather. And to put this into perspective, the FMD outbreak in Germany was particularly important because Germany is not only the seventh largest exporter of frozen pork meat in the world, but also the second largest producer in the European Union.

Now, this outbreak had two very different effects on trade. On one hand in non-EU markets, we saw a real standstill for German shipments after the country lost its FMD-free status. So major importing markets like South Korea, China, and the UK banned pork imports from Germany quite immediately. On the other hand, we saw a major impact on the EU market that was a consequence of Germany's exit from non-EU markets. So thanks to regionalization rules in Europe, Germany was still able to sell meat within the EU. So of course all the meat that couldn't be shipped overseas suddenly became available in the EU market, and this put a lot of pressure on prices across Europe.

Heather:

Thanks, Desire. Samyak, have you got any thoughts on FMD's impact to trade?

Samyak:

Yeah, thanks. So Germany's temporary exit from non-EU pork markets due to FMD opened up opportunities for a lot of other exporters regionally, countries like Spain, Netherlands, and Denmark capitalized on this by increasing their exports to markets like South Korea, UK.

This shift also underscores the vulnerability of export-dependent industries to disease outbreaks and the importance of robust biosecurity measures to maintain market stability. As far as the 2025 FMD break have costed Germany pork sector at least 1 billion euros in loss sales according to the German Farm Cooperative group, DGRV. Also, the ASF outbreak reduces pig inventories by roughly 3-4%, pig meat production is lowered by over 4%, and the exports fall by nearly 15% in the year following outbreaks, as the ASF outbreak causes supply chain shortages and price volatility.

Heather:

And how do you see this situation evolving in the coming months, especially given that trade flows are starting to shift with the US tariffs coming into fall soon?

Desire:

Well, it will really depend on how the disease evolves, of course. We've seen that after 3 months of the German outbreak, Germany regained its FMD-free status and it's back into external markets. But we cannot overlook the fact that Europe isn't free of the disease just yet. So this year there were over 10 reported cases of cattle along the Hungary-Slovakia border, and although these cases didn't have a major impact on trade because these countries don't play a role as important as Germany, the health risk is still very much present in Europe.

Heather:

Thanks, Desire. So it seems that how well a government responds is going to play a key role in determining how well the market bounces back. Sarah and Samyak, what's your take on the longer-term impacts to trade flows?

Sarah:

As Desire pointed out, it's great news that Germany has regained its FMD-free status. It's a really positive step forward for the country. But just because they've got the status back doesn't mean trade will just step back to normal. The UK is now recognizing the regionalization of FMD in Germany, which means Germany can start exporting pork from areas that are outside the contamination zone to the UK. However, we are likely to see some other trade partners be a little bit more cautious. So take South Korea, for example. We might expect them to take a little bit more of a conservative approach. Remember, they suspended pork imports from Germany for over 2 years after the African swine fever outbreak and only started trading again in 2023. So I expect South Korea's ban will remain for a little while longer, putting down pressure on EU external exports for the remainder of 2025.

Samyak:

And to put things into larger schemes or perspectives for our listeners, globally, the part of FAO global Food Price Index and the Meat Price Index, which is also part of the overall price basket, averaged 121.6 points in April, which is up by 3.7 points on month and 5 points on year. This surge was primarily attributed to pork registering the most significant increases across the food bodies. The rise was driven by higher quotation in EU due to stronger global import demand following the reinstatement of Germany's FMD-free status and lifting of related restrictions by importers.

This was also further bolstered by increased seasonal demand across the globe. Meanwhile, according to market stakeholders, the strengthening of EU euro against US dollar has also supported this upward trend in global pork prices. Moreover, the US tariffs introduced in March 2025 primarily target feed, causing supply chain disruption and increased cost globally. Also, China's retaliatory tariff on US pork has driven Chinese buyers to EU suppliers like Spain and Denmark, thereby boosting EU pork exports to China in double digits in second quarter of 2025. Also, the reduced US pork exports to Mexico and Japan due to tariffs, USMCA, and other disruptions have created opportunities for EU exporters. But the ban certainly limits some gains, but also, the unaffected FMD exporters like Spain and Netherlands, it's projected to increase exports to Japan by over 10% in 2025.

Heather:

Interesting. Thank you for that. I wonder how prices will fare going forward. Desire, we've already seen some pretty volatile markets since the outbreak in January. How have you seen prices react?

Desire:

Right, Heather. So export prices reacted instantly. In fact, Platts' EU Pork Marker, that is an assessment for pork bellies shipped from Spain, increased by almost 9% during the first month only after the FMD outbreak. In February this year, the tradable value of frozen Spanish pork bellies destined to Asia, mainly, surpassed the €4,600 per metric ton, and price indications haven't weakened since then.

From a demand perspective for Asian markets like Japan, South Korea, and the Philippines, the loss of a significant supplier like Germany came right at the time when there is typically a high demand for pork, and this is to build stocks ahead of a spring and summer when local and tourist consumption in these countries peak. So in line with this, Platts' CFR North Asia assessment of pork bellies as well rose by 6% in demand following the first outbreak in Germany. And as I mentioned before, the oversupply of German meat in the EU caused quite the opposite effect on prices in this market. So pork prices fell sharply in Europe after the FMD outbreak in Germany and are now recovering.

Heather:

And with all the uncertainty surrounding the disease, as well as the uncertainty in the political sphere, how do you think FMD is going to impact prices in the coming months, Sarah?

Sarah:

Yeah, there's definitely a lot of factors at play when it comes to prices moving forward. If we focus on the FMD impact, with the outbreak under control in Germany, the EU class E carcass price has actually bounced back from the initial fall related to the outbreak and is now trading about 9% higher than where it was before the outbreak. And now as Europe heads into the warmer months, we typically see the domestic demand increase, which tends to push prices up. Plus, with chicken and beef prices elevated across Europe, that could boost demand for pork even further as consumers swap to pork.

So I think we'll see prices continue to be supported in the coming months, however, we can't ignore that the price differentials across the EU have really shifted since the outbreak. So before the outbreak, Germany's carcass price were at a premium compared to Spain and Poland, but now they're trading at a discount due to the loss of demand from international trade. And that trend seems likely to continue for a while. But as you mentioned, Heather, there are so many other factors that may influence the price this year, like tariffs and China's anti-dumping investigation on EU pork. So while FMD is a big piece of the puzzle, it's certainly not the only one.

Heather:

Thanks, Sarah. Tariffs are on everyone's mind at the moment. We've got the new tariffs which will come into effect plus the anti-probing investigation in China. How are you seeing the fundamentals of the market being reshaped, and what do you think this is going to do to the market going forward?

Sarah:

Yeah, so tariffs are definitely a hot topic right now, and adding the China's anti-dumping investigation, both could really reshape the fundamentals of the pork market in some interesting ways. Starting with the tariffs, it's worth noting that the US and Europe don't actually trade a whole lot of pork with each other. Only about 4% of the EU's total pork exports head to the US. So in that sense, the immediate impact on the EU market might be limited. However, when we compare this to poultry and beef, EU pork is the most reliant on the US market, so there is still some risk. But I think the broader impact could be the more significant ones for the EU pork market. So there might be opportunities opening up in the Chinese market as China looks for other trade partners for pork that they would normally get from the US. Saying that, with Brazil's production capacity and low production costs, it's likely they will be the largest benefactors.

Desire:

Great point, Sarah. And I would like to add to this that we also need to consider input costs like animal feed. Those costs could rise if tariffs are implemented, and then if negotiations don't go well and the EU decides to impose tariffs too, it could really affect the supply, particularly of soybeans. Let's not forget that the United States is actually the EU's second largest supplier of soybeans, which are key for animal feed in Europe.

And then there is the anti-dumping investigation that China is currently conducting on EU pork, which is expected to wrap up around mid-year, and the outcome of this investigation could really change the dynamics of external trade demand for EU pork with China being, of course, a key market for its exports. So all in all, it's quite a complex situation with a lot of moving parts.

Heather:

Great. Thank you for that. To wrap things up today, could you each give me one key takeaway from this podcast? Desire, why don't we start with you?

Desire:

Sure. So from the pricing perspective, I would say that diseases like FMD are proving to have a significant impact on trade and prices. They can actually influence markets in quite different directions, as we've seen this year in the EU and beyond. Today, 4 months after the first FMD outbreak in Germany, export prices still haven't shown any signs of bouncing back to the levels we saw before the outbreak.

Samyak:

So the coming months are expected to see EMEA pork markets shaped by new US tariffs, China's anti-dumping investigation, and ongoing disease management strategies, meanwhile, the regionalization and vaccination programs are helping mitigate some risks. The response across Europe has been uneven, and also the uncertainty remains high in this perspective. The oversupply has pressured the prices, but at the same time, feed disruption has sustained to offset the setback to a certain extent. Moreover, the future risk mitigation hinges on vaccine development, diversified export markets, and navigating US tariffs and China's probe, which could altogether shift EU export markets, as we have seen, as China remains the most crucial and important buyer for this market. Sales to other Asian markets, including Philippines and Japan, have also increased significantly.

Sarah:

In my view, I think the key takeaway from this discussion is that the outbreak of disease does not have uniform implications for all countries within the EU, and we've seen this play out for Germany versus Spain. And in this situation, along with all the other various market factors, it really reinforces the importance of traders to maintain a diverse set of export markets.

Heather:

Brilliant. Thanks very much Desire, Sarah, and Samyak for joining me in this conversation. And thank you to our listeners for tuning in. This Commodities Focus episode was produced by Jennifer Pedrick in Houston.