China accounts for half of the world's pork consumption and soybean meal represents a significant proportion of the livestock diet. According to the latest report from the United States Department of Agriculture (USDA) for 2024, a 3% contraction in local pork consumption is expected, explained in part by the economic slowdown that China is facing this year.
In addition, the sow inventory has been cut back significantly from the high levels reached in previous years. In 2023, with over 717 million head, ample pork supplies led to depressed prices throughout the cycle and, according to China's Ministry of Agriculture and Rural Affairs (MARA), pork producers had not suffered such significant sustained losses since 2014. This situation tended to worsen with the incidence of African swine fever, which led to a significant pace of livestock liquidation last year, a trend that continued through the first half of 2024.
Between January and June of this year, the pig slaughter reached 160 million head, the same as during the first half of last year, thus being the most significant liquidation rate in at least fifteen years.
According to USDA's latest update, the number of sows in 2024 would fall 3% from 2023 to 695 million head, the lowest level since 2021, leaving China with the tightest stocks since 2019 at the end of the year.
A lower sow inventory requires, in short, less feed, weakening the demand for soybean meal. In addition to the fall in demand, China has high levels of soybean stocks in the main ports.
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