Future pig prices down to Chinese decision on EU imports

On Monday, China launched an anti-dumping investigation into imports of EU pork products, which it claimed was in response to an application submitted on behalf of its domestic producers.

This announcement came on the back of a decision made the previous week by the EU, to slap an additional tariff of up to 38% on Chinese electric vehicle imports from next month after an anti-subsidy probe.

Normally, such investigations can take up to a year.

READ MORE | Stability in pig sector set to continue – Andy McGowan

Andy McGowan ceo of Scottish Pig Producers

Andy McGowan, managing director of Scottish Pig Producers, believes there could be huge repercussions on EU and UK markets too.

“I do think that if it does come to pass that the Chinese decide to ban EU imports of pigmeat, it will have pretty serious implications on EU and UK pig prices.

“It doesn’t look like the EU is going to change its stance on the extra tariffs on electric car imports, and the Chinese don’t hang about in making decisions, so we’ll probably know by mid-July,” said Mr McGowan.

He added that while African Swine Fever saw mass destruction of China’s pig herd in 2017, since then the Chinese government has thrown so much money at the sector that the country is seeing mass overproduction and much reduced prices for finished pigs.

“Domestic pig producers in China have been losing money because the expansion happened so quickly,” Mr McGowan said.

“It was so easy for them to re-stock when there was so much financial support from the Chinese government.

“Therefore, there is no downside to the Chinese if they decide to ban EU pigmeat and such a move would ultimately help their producers.”

However, a ban would significantly impact EU producers and indirectly UK producers when the Chinese imported US$3bn pork and pork by-products from European nations last year, according to data from Chinese customs.

“If the EU price sinks because of China’s ban on exports, the UK is likely to see loads more imports from Europe and a resultant fall in GB pig values,” said Mr McGowan.

“We knew that the stability in the market wouldn’t last forever, so we have to prepare ourselves and look to improve the promotion of our Scottish branding.”

GB pig prices have already started falling despite reduced numbers on the market, with last week’s fall in the standard price of more than 1p appearing completely out of the blue.

Figures show that for the week ended June 8, the EU-spec SPP slipped 1.23p per kg to level at 210.16p/kg, while the all pig price (APP) fell 2.65p to 211.06p.

This put the SPP at 3.7p below where it was at the start of the year and almost 12p below a year ago.

Mr McGowan said there was no clear reason why the price should have dropped and that it was most likely due to reduced numbers forward for trading on spot markets, with more out of specification pigs in the lots.

The NPA said the surprise fall in the pig price was the biggest movement either way for the price index since mid-October.

“It broke a ‘remarkably stable’ run dating back to mid-January that has seen the SPP confined within a narrow band of less than 1p (210.67-211.61p/kg),” it said.

Price falls were recorded despite the fact that EU prices are currently stable and pig supplies appear tight.

The European reference price dropped back slightly during the week ended June 2 to 188.15p/kg, with the gap to the equivalent UK reference price just over 21p, which is a fairly typical difference.

Estimated GB slaughterings for the same week were also down on the previous seven days, according to figures from AHDB which show numbers fell by almost 3000 head from 148,187.

Average carcase weights dropped back slightly to 90.47kg in the SPP sample during the week ended June 9, nearly 2kg up on the same week in 2023.