Dry CargoGreater China

Chinese swine epidemic muddies handy outlook

Owners of smaller bulk carriers could suffer from the African swine fever epidemic sweeping through China that has already seen millions of pigs culled.

The viral disease, first reported in China in August, has infected swines across the country, which raises half the world’s pigs, with severe global reverberations for global grain supply chains.

The latest weekly report from Cleaves Securities noted: “The Chinese pig industry accounts for a large portion of oil seed imports, encompassing important dry bulk commodities such as soybeans and canola. These oil seeds are often sourced from tonne-mile intensive locations, such as Canada, the US and Brazil.”

Cleaves cited downside risk to smaller vessel segments such as supramaxes and handies as the full ramifications of the epidemic become clearer, something Beijing has been downplaying to date.

Arlan Suderman, a commodities economist with New York-based brokerage INTL FCStone, has estimated that China’s nationwide pig feeding has dropped by more than 40%, or about 300m pigs in terms of annual production.

A survey by Bloomberg of 11 analysts and traders estimated an average decline of 30%.

It may be five to seven years before the disease stops spreading and farms replenish lost stocks, Suderman told Bloomberg. That could result in an annualised pork deficit of 16.2m tonnes, an amount 1.3 times larger than what the US produced last year.

The US Department of Agriculture (USDA) stated recently that pig farms in China are “vastly” under-reporting outbreaks.

“Unofficial reports from China suggest far greater losses” than official data that shows culls are a fraction of China’s total pig supply, the USDA stated in a report earlier this month.

Latest forecasts point to a loss of swine this year equivalent to the European Union’s annual supply.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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