With
Chinese pigs getting slaughtering left and right to contain the
breakout of African swine fever, also known as "Pig Ebola", so are pork
shorts as meat processors around the world scramble to sell more pork to
China to make up for sharp shortages of China's most popular protein.
The consequence is tighter supplies in the U.S. and Europe, which is
pushing up prices. And as the disease continues to spread throughout
China - the world’s largest producer and consumer - the trend will only
get worse.
But none of this compares to what is about to hit China, where
consumers are bracing for a shock as pork prices may surge more than
70% in the second half of this year an agriculture ministry official
said last month, as the country's pork output has plunged as much as 30% this year,
according to Rabobank, and could spike Chinese CPI in the coming
months, sharply limiting the PBOC's efforts to stimulate and boost
liquidity in the world's (credit-driven) growth dynamo and curbing
China's latest attempt to reflate the world and boost global economic
growth.
“Some meat that used to go to the U.S. is now going to China because
it pays more,” Jens Munk Ebbesen, director of food safety and veterinary
issues at the Danish Agriculture & Food Council recently told Bloomberg.
Seeking to frontrun some of the price surge, China recently made its biggest-ever weekly purchase of US pork:
価格急騰の先頭を走っているのは中国で、最近米国ポーク市場で最大の週間買い付けを行った：
"African swine fever has sparked a rally across global protein
stocks, but it’s not too late to buy in,” Morgan Stanley analysts led by
Rafael Shin said in an April report to clients this week.“We think the rally has only begun and that the long-term impacts of ASF are still not understood." 「豚コレラは世界の食肉関連銘柄の高騰を引き起こしている、しかしまだ買うのに遅くはない、」とモルガン・スタンレーのアナリスト Rafael Shinは今週のレポートで書いた。「私どもの見立てではラリーはまだ始まったばかりだ、そして豚コレラの長期的影響についてはまだ理解されていない。」
Morgan Stanley may be on to something because as Bloomberg reported
last week, Thailand, one of Asia’s top pork producers, is intensifying
efforts to hold off the spread of the lethal pig virus that’s causing
havoc as it spreads across the region.
No longer contained just to China, "Pig Ebola" - which as its name
suggest kills nearly all the pigs it infects -has crossed the Chinese
border, and has been spreading through Asia from Mongolia to Vietnam and
Cambodia. Millions of pigs have been culled, creating a global
protein shortage and saddling farmers and food businesses with billions
of dollars in costs. 中国ではすでに抑制に失敗し、「豚エボラ」ーー名前の通り感染するとすべて死ぬーーこれがすでに中国国境を超えており、アジアに拡散している、モンゴルからベトナム、カンボジアまで。何百万頭という豚がすでに殺処分された、これが世界的なタンパク質不足を引き起こし、農家や食料業者にビリオンドルのコストを引き起こしている。
The focus is now on Thailand, where Anan Suwannarat, the permanent
secretary in Thailand’s Agriculture Ministry, told Bloomberg that "we’re
on red alert for the pig virus" adding that "we’re trying everything to
prevent it from spreading to Thailand."
As a result, Thailand has tightened inspections at airports and
border checkpoints, cracked down on illegal slaughterhouses and traders,
and imposed stricter requirements for reporting hog deaths. The
authorities have detected contaminated pork products at airports and
borders, but have not yet found any cases at farms.
As Thailand is aggressively seeking to halt the spread of ASF, so is
Vietnam, Southeast Asia’s biggest pork producer, which discovered its
first case in February. Cambodia - sandwiched between Vietnam and
Thailand - reported its first infection less than two months later.
"Preventing the outbreak is our national agenda," said Cheerasak
Pipatpongsopon, the deputy director-general at Thailand’s Livestock
Department. "Even if it gets into the country, we’ll be quick in
containing the outbreak to minimize the damage to the industry."
Unfortunately, it now appears that Pig Ebola has indeed spread and overnight Bloomberg reported that Vietnam has culled more than 1.7 million pigs as African swine fever spread across the country. 残念なことに、今や豚エボラはすでに拡散している、昨夜のブルームバーグの報告ではベトナムではすでに１．７M頭の豚が殺処分された。
But back to Thailand where the Agriculture Ministry has
estimated an outbreak may cost the Thai economy more than $1 billion if
over 50% of the country’s hogs are infected. That could reach
nearly $2 billion if 80% are infected. The Thai government last month
approved a $4.7 million budget to prepare the nation for a potential
outbreak.
African swine fever reported in Hong Kong and more Vietnamese regions in May. Souice: Bloomberg's Dominic Carey
While not nearly as productive as pig powerhouse Vietnam, Thailand
produces over 2 million hogs each year, and exports about 40% to
Cambodia, Laos and Myanmar. It doesn’t import live hogs or pork meat and
visitors are no longer permitted to bring processed pork products into
the country. In a crackdown to prevent infected pigs from entering the
country, it has confiscated pork products at its airports and borders
550 times since August, detecting the virus 43 times, according to the
Livestock Department.
Making matters worse, porous borders increase the risk of the disease
entering the country. The virus can survive in uncooked meat for a long
period of time, and hogs can get infected if contaminated food gets
into their feed.
But of all Asian nations, it is China that faces the greatest risk by
far. China slaughters almost 700 million pigs a year and pork is by far
the most widely eaten meat. The problem is that as China scrambles to
contain the raging virus, it is forced to cull herds across the country.
As Reuters reported last week,
citing the latest Ministry of Agriculture and Rural Affairs data,
China’s sow herd in April fell a whopping 22.3% compared with the same
month a year earlier.
The good news for now is that while pork prices have spiked, resulting in a 14.4% pork CPI in April...
現在のところの良いニュースだが、ポーク価格急騰とはいえ、まだ４月時点では１４．４％の上昇にとどまっている・・・・
... prices are also being kept in check as frozen pork stocks are being sold - call it the Strategic Porkolium Reserve - since slaughterhouses have slowed down business in order to comply with new rules to test for the deadly virus.
But as noted above, the industry is expecting prices to soar in the
second half - perhaps more than 60%, surpassing the great food inflation
scare of 2011, with production still falling. “With the disease still
present, it will keep falling,” Qin Yinglin, president of Muyuan Foods ,
China’s second-largest pig farmer, told Reuters.
He is right, because while the official May inflation data has to be
reported, pork prices in China - along with fruits and vegetables - have
surged even more so far in May, putting more pressure on households’
wallets and increasing inflationary pressures.
In fact, as shown below, the price of virtually every food product in China is rising at double digits in China.
実際、下に示すが、中国のほとんどどの食料品も二桁で物価上昇している。
Making matters even worse, while Chinese Vice premier Hu Chunhua has been encouraging pig farmers to restock farms "as worries grow over the impact of rising pork prices on the economy and social stability", farmers
are nervous about repopulating farms that have had outbreaks because of
the risk of new pigs catching the fatal disease if the farm has not
been properly decontaminated.
But in what is perhaps the biggest headache, this being China none of
the data can be trusted. Indeed, as Reuters notes, while there have
been 126 reported outbreaks of African swine fever on domestic pig
farms, Beijing has not confirmed the disease
on many large producers even as industry insiders say many large-scale
farms have experienced numerous outbreaks.
Putting all this together, and one can see why Trump felt empowered
to resume the trade war at the start of May: after all, between the
collapse in trade and soaring food, and especially pork prices, China is
suddenly facing a stark risk of stagflation which, as Bloomberg's
Benjamin Dow notes, could be yet another force to weaken the yuan beyond
7 per USD (and may explain the PBOC's panic at preventing FX shorts
from piling on).
As Dow notes, "higher pork prices combining with a trade slowdown would bring stagflation pressures to bear on CNY."
He concludes that the ongoing price surge "may also obliquely weaponize
the currency anyway, despite any deliberate attempts by Chinese
authorities to avoid such a scenario."
Such a stagflationary scenario could have dire consequences for
Chinese monetary policy and the global economy, as the projected 60%
spike in pork prices would sharply limit the PBOC's efforts to stimulate
and boost liquidity in the world's (credit-driven) growth dynamo and
further curb China's latest attempt to reflate the world and boost
global economic growth (especially now that Beijing has to tread very
carefully following the first failure of a Chinese commercial bank in
three decades, sparking the risk of a bank run).
Yet all of this is a welcome development for Trump, because while the
raging "Pig Ebola" and surging pork prices are terrible news for pork
consumers, Beijing politicians and the Chinese central bank, it's some
long overdue good news for embattled US farmers, who will be able to
sell their hogs for higher prices as a result of the soaring demand. And
while producers may start to breed more livestock, the process takes
time. "It will be a good moment for producers," said Didier Delzescaux,
the director of French pork council Inaporc.
ただこの状況はどれもトランプにとっては望ましいものだ、というのも「豚エボラ」大流行と豚肉価格急騰は消費者に取って恐ろしいニュースだが、北京の政治家と中国中央銀行にとって米国農家との対抗で待ち構えていたかの良いニュースだ、米農家は高値で豚肉を売ることができるようになるだろう。そして養豚業者はさらに家畜を増やそうとするが、それには時間がかかる。「生産者に取っては良い具合だろう、」とDidier Delzescauxは言う、彼はフランス養豚業界Inaporcの取締役だ。
Finally, it’s not just China that’s grappling with the spread of
disease: as noted above, with Asian nations still struggling to contain
the surge, pork prices may soar even more as fears spread in Europe that
the virus, which was detected in wild boars in Belgium last year, could
infect domestic hogs in major exporters, such as France and Germany.
France is in the process of building a fence running dozens of
kilometers near the border in an effort to contain the disease,
unfortunately in a stark comparison to similar "fortifications"
undertaken during World War II, this venture will fail spectacularly.
With all that in mind, two parting thoughts: should a worst case
scenario unfold and pig production crashes, will pork end up being the
best investment of 2019; second - with China clearly at a disadvantage
should the disease continue to spread, potentially resulting in social
instability if prices rise too high, one wonders if one or more Chinese
geopolitical rivals may have something to do with this relentless spread
of Pig Ebola. Because what better way to bring a nation, where pork is
the primary source of protein for its 1.42 billion population, to heel
than to "make sure" that pork production in said nation is crippled for
the foreseeable future, resulting in further economic pain, stagflation,
and ultimately, a white flag of surrender in the ongoing US-China trade
war...
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