African swine fever: Spain's pork sector faces trade and animal feed challenges

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Nanditha Kinavoor Madathil:

Hello and welcome to Platts Commodities Focus podcast by S&P Global Energy. Today, we'll be discussing about African Swine Fever, ASF outbreaks in Spain and other European countries, which are beginning to affect the populations for trade flows and free demand. We'll be examining how ASF is reshaping the European pork market, what it means for the feed demand and grain imports, and whether the impact could spread across Europe's livestock sector.

I am Nanditha Kinavoor Madathil, price reporter covering the European animal food market, and I'll be your host today. With me, I have Iara Lima, associate price reporter focusing on Spanish pork market and Magdalena Michalik, principal analyst specializing in European proteins.

Magda, let's start with the basics. What is African Swine Fever and why is it such an important issue for the global pork industry?

Magdalena Michalik:

Yeah, thank you, Nanditha. ASF is a highly contagious viral disease that affects pig populations and wild boar. It can spread very rapidly through contact with infected animals, contaminated feed, equipment, vehicles, clothing, or pork products. Which is exactly why strict biosecurity measures on farms are essential to prevent the disease from spreading. It poses no risk to human health, but it can have devastating consequences for pig populations and for international trade. It's especially devastating if found on a commercial farm. If affected, the farm could face complete depopulation and local authorities establish a protection zone around the farm.

Farms within the protection zone or surveillance zone face a movement ban on animals and finished products. And sometimes in high risk cases, there will be preventative culling on the farms within the protection zone. Moreover, countries that detect ASF often face import restrictions from trading partners, which can significantly affect pork exports and producer profitability. Even when outbreaks are limited, market sentiment can change very quickly because buyers become cautious and governments review import policies.

As a result, maintaining ASF free status is extremely important for pork producing nations, especially for major exporters. Iara, given that Spain is the largest pork producer and exporter, why do you think ASF attracts so much attention there?

Iara Lima:

Yeah, that's a really good point. So from a market reporting perspective, what makes Spain particularly important is the sheer amount of pork that moves through the country and into global markets, as well as within the EU. So Spain isn't only Europe's largest producer and exporter, it's also a price leader for many pork cuts which are traded internationally. And so because of that, any animal health development in Spain tends to attract a lot of attention almost immediately from buyers, sellers, and traders around the world essentially.

And what's important in the current situation is that the ASF detections we have seen so far have been limited to wild boar, rather than commercial pig farms. So for the pork market, this distinction is critical because it means that we're not seeing an immediate loss of production or large scale reductions in the herd numbers as you briefly mentioned, but instead we are seeing that the market is focusing on risk right now.

So participants are asking questions like, will any more countries impose restrictions? Will the existing buyers continue to buy from us? Or could export programs be interrupted and so on. And what we have seen is that concern and uncertainty, rather than a direct supply shock essentially moves the market. Slaughter activity and production have largely continued, but market participants remain very sensitive to any indication that the situation could essentially be worse and spread beyond wildlife populations. So ultimately because Spain occupies such a central position in the global pork trade, even a localized animal health issue can become a key topic very quickly in international markets.

Nanditha Kinavoor Madathil:

Iara, another topic receiving a lot of attention is regionalization and trade restrictions. Can you explain how ASF affects market access?

Iara Lima:

Yes. So regionalization has really become one of the key issues that market participants are monitoring literally on a daily basis. So in practice, what it determines is whether an exporter can continue shipping product from unaffected regions like in their country or whether the access to an entire market is suddenly lost overnight. So for Spanish exporters, that uncertainty creates a very difficult commercial environment. Even before official restrictions are implemented, buyers often start to behave in a more cautious way. Contracts can take longer to negotiate and exporters may spend a lot more time reassuring their customers that there will be supply continuity.

So following the ASF detections, a number of importing countries introduced restrictions while they assessed the situation. And what the market has been watching most closely isn't just which countries are imposing these restrictions, but also how quickly authorities were willing to recognize regionalization methods. So the reason is quite straightforward for this. The faster these measures are accepted, the less disruption there is to normal trade. And from a pricing perspective, uncertainty itself can be very, very influential. So when exporters don't know whether access to a destination will be maintained, they often become more aggressive sellers in the alternative markets and that can increase competition and place a lot of pressure on prices even when the supply physically remains available. So while regionalization sounds like this technical regulatory concept, in reality, it's something that directly influences market confidence, trading behavior, and pricing across the sector as well.

And Nanditha, just turning to feed markets, what impact are you seeing on feed demand and buyer behavior amidst this entire situation?

Nanditha Kinavoor Madathil:

Thank you, Iara. So yes, we are definitely seeing feed demand slow down in Spain now. Part of that was seasonal because during the summer peaks, generally it less due to the heat, but more recently sources say ASF has added further pressure to it, especially in Catalonia where the peak production is the highest in Spain. What we are hearing is that the impact could become more visible in the coming months. Some market participants expect the feed production to be down in Q4 and potentially weaker again in Q1 2027. That's because there are fewer peaks after the ASF outbreaks and lower hog prices are also reducing the incentive to increase the production.

So we are seeing that this is reflected in buying behavior. Buyers are buying much more cautiously now, mainly covering their needs for the nearby terms, not building in large stocks. Many are waiting for the clear picture on livestock production and demand before making a bigger purchasing decisions.

So Magda, how is ASF affecting pork trade flows within Europe and export opportunities outside the region?

Magdalena Michalik:

Yeah, I think ASF continues to influence trade. However, it's really hard to quantify the impact of ASF itself as manufacturers are interacting in the pork market at once. So one effect we have seen is the market access. After the ASF outbreak and given the export restrictions, Spain had to find alternative destinations and often lower their prices to make their product more competitive in the international markets. And what this results in usually is that trade shifts internally within the EU, but also in the global scale.

However, European producers are also facing the higher import duties in China as a result of an anti-dumping investigation that concluded in 2025. Therefore, for Spain, the export restrictions from ASF, especially from Japan and higher duties to China have reshaped flows. So Spain has had to redirect a lot of their volumes from the original destinations that they had already settled in 2025.

Up to July, we have seen that export volumes are running slightly below 2025 levels. However, exports to EU countries have grown by 10%, which offset some of the loss to China and Japan. South Korea has also emerged as a particularly important destination with volumes growing by over 50% and absorbing some of the volumes that would've gone to China as well. However, not all product can be redirected. Some cuts and all falls are largely produced to suit China and the consumer preferences, hence the trade and trade flows cannot be instantaneous.

The UK is another important part of the story. Traditionally, it's one of the largest destinations for EU pork. However, the UK has seen relatively strong domestic production in 2026, which can limit import opportunities compared with previous years. And therefore the competition for export markets has intensified in the EU. Exporters are increasingly looking beyond their traditional destinations and are looking to diversify their customer base.

Internally within the EU, the market is incredibly competitive. Spain has redirected some of the volumes to other EU countries and competition to serve the internal market is very tight. However, looking ahead to next year, trade flows will likely continue to evolve. Spain is unlikely to regain their ASF free status in the near term, while China's restrictions are expected to remain in place for several more years.

Nanditha Kinavoor Madathil:

Thanks, Magda. So Iara, we have seen notable price movements in European pork markets this year. What has been driving those changes and how has demand responded?

Iara Lima:

Well, we are not sure demand has responded very well, unfortunately, but yes, to answer your question, we have seen a very significant correction in European pork prices this year. And one of the most interesting aspects of this is that market participants aren't pointing to a single cause. Instead, they are describing a combination of factors that have weighed on the valleys throughout much of this year, 2026. So to put the move into perspective, the Platts' EU pork marker, which is our assessment, we are looking specifically at a frozen belly on an FCA Barcelona basis. So our market has fallen from around 3,490 euros per metric ton at the beginning of December 2025, which was just after the first case of ASF was reported, which was at the end of November 2025. And by the end of September this year, we are now at 2,138 euros per metric ton.

So that's approximately a 39% decline, which is a substantial adjustment for the market of course. And from conversations with producers, traders, processors, a lot of the pressure has been linked to the balance between the available supply and buying interest. So for long periods this year, the buyers have been feeling quite comfortable essentially with coverage, what they have, and have shown very little interest and urgency in stepping into the market. And at the same time, sellers have had to compete very aggressively, as Magda mentioned, for business, creating this pressure on prices.

The belly market has been a particularly good example of this. So bellies represent an important component of the EU pork market for reasons I described earlier. And at various points this year, market participants described a saturated market where the supply simply exceeded the demand and that inevitably puts pressure on prices and weighs on market sentiment overall. So we also saw some temporary support during the summer months when the slaughter rates were much lower and the pig weights were lower as well. However, since we have moved into September now, we're getting into the autumn season, slaughter numbers and carcass weights began increasing again, and particularly in key producing countries in Europe, such as Spain and Germany. So more product is now available in the market and the demand for several fresh cuts has begun to soften, so it's kind of bad timing.

What's particularly interesting right now is that not all parts of the pork complex are moving in the same direction. So the fresh cuts have genuinely faced more pressure while some frozen products have shown greater resilience and the market is becoming increasingly segmented depending on product availability and end user demand. So just looking ahead, majority of the people we speak to, market participants, expect prices to remain brutally flat to slightly lower in the near term, but the sentiment is still very cautious and traders are continuing to watch demand very closely.

What we're hearing is that buyers are very disciplined. At the moment, they're just purchasing what they need and they're generally reluctant to build significant forward positions until they have more confidence in the underlying consumption trends. So while the prices have fallen considerably this year, the market is still searching for clearer signals on demand before it becomes more optimistic about the months ahead. And I'm just wondering as well, pig producers and feed buy, what should they be monitoring in the months ahead?

Nanditha Kinavoor Madathil:

Yeah, that would be really interesting topic because beyond ASF, I think the feed buyers and the pig producers will be watching feed costs very closely. We have seen a lot of volatility in soybean meal and grain prices recently driven by future markets, currency movements and changes in replacement costs and the oil prices and everything that's happening globally that makes it difficult for buyers to know when to lock in purchases. As a result, many are only buying what they need for the near term rather than committing to a larger volume further ahead.

Weather will be another key factor to watch. We have already seen concerns about corn production in parts of Europe this year, especially in France, parts of Spain, Italy, et cetera. And grain and oil seed markets can react very quickly to weather problems in major producing regions. If crop production is lower than expected, feed prices could rise, increasing costs for peak producers. So alongside ASF, feed buyers will be closely watching crop developments and feed ingredient prices in the months ahead.

So overall, beyond ASF, the big questions are whether feed costs remain volatile, how profitable pig production will be, and whether buyers gain enough confidence to start covering further forward again.

So to wrap up, ASF is not operating in isolation. It is arriving at a time when pig producers are facing lower margins. Feed buyers are navigating volatile grain and oil seed markets, and trade flows continue to adjust to changing market access conditions. The effects are being felt across pork markets, feed demand, purchasing behavior, and these trends will remain closely watched as the market moves to 2027.

Thank you, Magdalena and Iara for joining me today, and thank you for listening to us. This episode was produced by Chandreyee Mukherjee in Gurgaon, India. Thank you.