Pork exports drop below 2016 levels in June but sales to Japan and South Korea are growing

Following year-on-year growth during the previous month, UK pork exports faltered during June, according to new analysis from AHDB Pork. Fresh/frozen pork shipments during the month were down 5% on a year earlier at 17.5 thousand tonnes.

Limited availability of exportable supplies likely continued to impact exports, with UK pig meat production during the month down 2% on June 2016. Growth in pork exports has also been deterred by slower demand from China, with shipments 15% lower than in June 2016. Meanwhile, trade with the EU showed a smaller decline of 2% on the year in June. Falling shipments to Ireland and Denmark were partially countered by increases in exports to the Netherlands and Germany.

Nonetheless, a rise in the average unit price meant that the value of UK pork exports was still 11% higher than in June 2016, at £24.5 million. A decline in the value of shipments to China and fewer high value cuts going to the US led to the EU’s share of the UK pork export market value returning to 70%. It had previously dropped to nearer 60% in 2016.

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Offal shipments during June were also 4% lower year-on-year, totalling 5.7 thousand tonnes. A 30% decline in shipments to China, the UK’s primary export destination, drove the overall decline. However, the impact of this was lessened by significant increases in shipments to both Hong Kong (+64%) and the Philippines (+112%).

Conversely, exports of other pig meat products such as bacon, sausages and processed grew strongly during June, compared to both the previous month and June 2016. However, there are some doubts surrounding these figures, given that the increases were driven by unusually large shipments to Denmark and the Netherlands during the month.

A bright spot in the export market is both Japan and South Korea, which have reported year-on-year increases in fresh/frozen pork imports during the first half of 2017. With Chinese import demand slowing in the second quarter, these destinations have become increasingly important outlets for the global pork market.

During the first six months of 2017, Japan imported 459,000 tonnes of pork, 7% more than in the same period last year. Shipments from Canada in particular were 19% higher year-on-year. Meanwhile, the other key suppliers, the EU and US, saw more modest increases of 3% and 4% respectively. The expansion in EU shipments was largely driven by increasing imports from Spain in the second quarter. Conversely, US shipments actually fell 1% on the year in Q2.

For South Korea, fresh/frozen pork imports increased 12% on 2016 during the first half of the year, reaching 257,000 tonnes. Disease outbreaks in both the beef and poultry sectors have reportedly boosted demand for pig meat this year.

EU shipments, which were up 25% year-on-year and now provide over half of import requirements, drove the overall expansion. Within this, volumes from Germany and the Netherlands were up 46% and 58% respectively. The sharp increase in German shipments in particular is likely related to the temporary suspension of exports to China from a number of key plants earlier this year. The UK also supplies pig meat to South Korea, albeit in small volumes (1,600 tonnes), but shipments were nonetheless 50% higher than a year earlier.

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Looking forwards, Chinese import demand is could remain behind 2016 levels in the latter half of the year. Reports suggest there are expectations extensive farm closures could occur during Q3 under environmental regulations, leading to a temporary oversupply of pork on the market. As such, how Japanese and South Korean import demand develops throughout the rest of 2017 could be key to global market balance. Nonetheless, the outlook for South Korean demand at least seems positive, with pork likely to continue benefitting from disease pressures in the other protein sectors.

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