Global protein market being disrupted by African swine fever

Increased demand due to African swine fever continues to be good news for Australian producers.

AFRICAN swine fever will continue to drive the global protein market next year.

And Australian beef and sheepmeat prices are set to benefit.

Rabobank’s Global Animal Protein Outlook 2020 report, released on Monday, shows while production growth is expected in most regions next year, the impact of ASF will “overwhelm” the outlook.

As Chinese pork production is expected to fall a further 10-15 per cent next year, Rabobank senior animal proteins analyst Angus Gidley-Baird said the drop in pork production was “driving a hole in the global protein” market that “simply cannot be met”.

“There has been fairly consistent and steady growth of beef production in North and South America for the past couple of years, but the massive gap created by ASF will soak up that increased production,” Mr Gidley-Baird said.

He said global demand would keep Australian beef and sheepmeat prices strong and they would rise further as seasonal conditions improved and producers restocked.

However, even if season conditions remained dry for a while longer, Mr Gidley-Baird said prices should not fall much, because the volume of stock was not available.

While China is driving the export demand, Mr Gidley-Baird said other markets were having to pay more for protein.

“An example is the 90CL beef price is at $8.50/kg, which is a record level, which shows the US has to pay more to attract product in to that market,” he said.

Although high prices have been positive for producers during the drought, Mr Gidley-Baird said it was “frustrating” for the Australian industry there was not more product available to meet the stronger demand.

Mecardo analyst Matt Dalgleish said China’s pig herd was yet to reach its lowest point and the effects of ASF would continue in to next year.

“I think prices for sheepmeat and beef will go higher next year, but there is uncertainty around how that will play out,” Mr Dalgleish said.

He said China was importing a big portion of 90CL lean meat from Australia and New Zealand, which was pushing up prices.

“ASF is changing the dynamics of the global protein market. There is a 20 million tonne gap in protein this year and that is expected to widen to 35 million tonnes next year,” Mr Dalgleish said.