China now a pillar to global meat markets

While African Swine Fever (ASF) has dominated headlines over the last year, and added further fuel to imported meat demand, the growing importance of China as a global meat market has been underway for the past decade.

Inclusive of Hong Kong, China is now the world’s largest destination for beef, sheepmeat, pork, poultry and offal, pulling in close to one quarter of total meat traded on international markets.

Never before in modern history has the global meat trade centred so much on a single country.

Demand from China has been critical in supporting the value of Australian beef and sheepmeat, especially during recent drought-induced elevated livestock turnoff, but the dominance of a single market poses risks as well as opportunities amidst the current turbulent global trade environment.

While China has always been a large animal protein market due to its sheer size (representing an estimated 46% of global pork consumption, 15% of poultry, 11% of beef and 33% of sheepmeat in 2018), its growing importance as an importer is evidenced across most meat proteins. This rise has been underpinned by environmental and resource constraints limiting production capacity and consumers shifting, as they become more affluent, from carbohydrate grain-based diets to protein-rich foods derived from animal products.

As highlighted below, China’s share of global beef imports increased from 4% to 23% between 2009 and the most recent 12-months of available data, while sheepmeat jumped from 10% to 36%. Pork imports have lifted from 12% to 26%, while offal has increased from 38% to 47% over the same period. China’s share of the global poultry trade has remained flat due to expanding domestic production.

China’s expanded presence as a major meat buyer has been critical to supporting global prices at a time of record meat production and trade, especially for key exporting nations such as Australia. However, as the importance of China grows, so does its influence upon the market.

Two major, and potentially competing, forces will dictate global trade flows and imported meat demand in China in coming years: ASF and the economic impact of the escalating trade tensions with the US.

The gap left by ASF

ASF will leave a massive hole in China’s domestic meat supply, with estimates for the 2019 decline in pork production ranging from 20-40% (or 10-20 million tonnes cwe). Even if a conservative decline were to come to fruition, there would not be enough meat traded on the global market to fill the gap. After rising steadily in 2019, wholesale pork prices in China have surged in recent weeks, surpassing the ¥30/kg ceiling previously tested in 2016.

/Public Release. View in full here.