Cargill close factories in China due to swine flu

The African swine flu has killed hundreds of thousands of pigs in China and is tinkering with global supply chains. As a result, grain handler Cargill in China was forced to close some of its factories in the Asian country.

More recent data show that China’s herds, the world’s largest, have shrunk more in June, down 26% from the same period last year.

A report released earlier this month by the Organization for Economic Co-operation and Development (OECD) and the United Nations Food and Agriculture Organization (FAO), predicts a 5% drop in Chinese pork production this year. Meanwhile, imports of pork meat should increase to almost 2m tons from an average of 1.6m tons per year over the period 2016-2018.

Those who benefit from this are the companies that operate with reefer transportation since the country will need to increase imports of pork to supply its domestic demand.

On the other hand, there are significant losses of bulk transportation and soy production, mainly from Brazil and the United States, as demand for this grain has dropped to feed the pigs.

A recent report by the US Department of Agriculture (USDA) estimated that China’s soy imports fell to 84m tons in the 18/19 crop and 83m tons in the 19/20 harvest, compared with 94.1m tons in the 17/18 period.

Agribusiness giant Cargill, for example, had to close several animal feed factories in China in recent months.

“This is not a six-month trend for China to recover,” said Chuck Warta, chairman of Cargill’s animal nutrition and premix division, in an interview with Reuters earlier this month. “It will take about 24-36 months to replenish the world’s animal population.”

Warta said most of the closed facilities should remain closed, even if China has the disease under control.

Cargill has shut down three animal food and nutrition factories in China in recent months, representing a capacity reduction of approximately 150,000 tons.

The disease has spread to Southeast Asia and is now entering Europe, with reported cases in Belgium and Bulgaria.

The following DataLiner graph shows Brazil’s pork, beef, and chicken export trends to China from January 2015:

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