One month after we reported that US federal agents seized 1 million pounds, or 454 metric tons, of pork smuggled from China to the same port amid growing fears the meat could contain traces of the African swine fever virus that has ravaged the Asian country’s hog herd, and which has sent pork prices soaring, the pig panic has gone global and as Bloomberg writes, as a result of the crippling virus that has decimated China's hog industry, everything from barbecue to chorizo and German bratwurst will be sharply move expensive in the coming months.
With Chinese pigs getting slaughtering left and right to contain the Arrican swine fever, so are port shorts as meat processors around the world scramble to sell more pork to China to make up for sharp shortages of China's most popular protein. The consequence is tighter supplies in the U.S. and Europe, which is pushing up prices. And as the disease continues to spread throughout China - the world’s largest producer and consumer - the trend will only get worse.
Case in point: US retail prices for boneless hams hit $4.31 per pound in March, the highest since 2015.
In the European Union, wholesale pig prices have climbed 16% in two months, while lean hog futures traded on the CME are higher by 32% since the February lows.
But none of this compares to what is about to hit China, where consumers are bracing for a shock as pork prices may surge more than 70% in the second half of this year an agriculture ministry official said this week, as the country's pork output plunges as much as 30% this year, according to Rabobank, and could spike Chinese CPI in the coming months, sharply limiting the PBOC's efforts to stimulate and boost liquidity in the world's (credit-driven) growth dynamo and curbing China's latest attempt to reflate the world and boost global economic growth.
“Some meat that used to go to the U.S. is now going to China because it pays more,” Jens Munk Ebbesen, director of food safety and veterinary issues at the Danish Agriculture & Food Council, told Bloomberg.
Far from limited to just pigs, the virus which has upended China’s meat industry, will have devastating - for meat lovers and pork shorts - and far-reaching effects, from pushing up food prices to increasing demand for other meats, like chicken and beef.
Seeking to frontrun some of the price surges, China recently made its biggest-ever weekly purchase of US pork as shares of Brazil's JBS, the world’s largest meat producer, rallied 8% this week.
"African swine fever has sparked a rally across global protein stocks, but it’s not too late to buy in,” Morgan Stanley analysts led by Rafael Shin said in a report to clients this week. “We think the rally has only begun and that the long-term impacts of ASF are still not understood."
While this is terrible news for pork consumers, it's some long overdue good news for embattled US farmers, who will be able to sell their hogs for higher prices as a result of the soaring demand. And while producers may start to breed more livestock, the process takes time.
"It will be a good moment for producers," said Didier Delzescaux, the director of French pork council Inaporc.
Finally, it’s not just China that’s grappling with the spread of disease: pork prices may soar even more, as fears spread in Europe that the virus, which was detected in wild boars in Belgium last year, could infect domestic hogs in major exporters, such as France and Germany. France is in the process of building a fence running dozens of kilometers near the border in an effort to contain the disease, unfortunately in a stark comparison to similar "fortifications" undertaken during World War II, this venture will fail spectacularly.