Report says African Swine Fever has bigger impact on global pork market than Covid-19
While the effects of Covid-19 on the global pork supply chain are prominent, a report by financial services company Rabobank says African Swine fever (ASF) remains the dominant issue in global animal protein.
The report lists the main uncertainties in global pork markets linked with ASF and Covid-19 as a loss of production associated with processing plant closures and the slowing of operations. As well as this, the report cites that a risk of an ASF outbreak in Germany further blurs the trade outlook for global pork supply.
While the report says Covid-19 has affected near-term pork production and consumption, and could also affect production, consumption, and trade over the longer term, ASF will have a longer-lasting impact on the market. It says: “The temporary closure of pork processing plants in many countries due to Covid-19 infections among workers has been widely reported. The slowdown of production in all plants to reduce Covid-19 transmission risks has, though, had a greater impact on pork production.
“Both Covid-19 and ASF are important in driving global pork markets. It is our view that ASF will have more profound and longer-lasting impacts on global animal protein markets than Covid-19.”
“Some of the changes made within processing plants will become part of the ‘new normal,’ and it is likely the cost of processing will increase as a result.
“The closure of many foodservice channels in many countries has impacted overall pork demand, and demand for certain products that rely heavily on foodservice. While foodservice is now reopening in most parts of the world, and lifting demand as a result, a return of 2019 demand levels is unlikely in 2020. The economic slowdown triggered by the Covid-19 pandemic has reduced consumer confidence, and we expect prices will need to adjust to enable consumption to match availability.
“Shipping movements have already declined as a result of Covid-19, pushing up costs for pork trade, and we do not anticipate these recovering in 2020. The economic slowdown has also caused relative currency movements, with an initial trend of the US dollar strengthening against other currencies, changing competitiveness in trade. While the value of the US dollar has been easing, we expect ongoing volatility in FX markets to affect trade through 2020.
“Both Covid-19 and ASF are important in driving global pork markets. It is our view that ASF will have more profound and longer-lasting impacts on global animal protein markets than Covid-19.”
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