It has been a rough month for Chinese swine and poultry producers. Last year’s aggressive crackdown by Chinese authorities against the illicit sick and dead pig trade yielded many offenders with life sentences, behind bars. However, as the old adage goes, “no good deed goes unpunished.” The crackdown produced unintended consequences in illegal pig dumping, and in mid-March there were reports of nearly 16,000 pig carcasses were being pulled from rivers supplying drinking water to China’s financial hub, Shanghai.
Not long after that story broke, authorities announced 1,000 dead ducks in Sichuan Province’s Nanhe River. The trifecta is completed by the recent outbreak of H7N9, a strain of the “bird flu.”
“Shanghai seems to be the epicenter of troubling news,” reported Kevin Roepke, manager of global trade for the U.S. Grains Council, who recently returned from Shanghai to inform traders and importers of U.S. corn supply and demand dynamics. “While the long term significance is not yet clear, it’s definitely had a ripple effect throughout many sectors. Global airline stocks have been hit hard after the fear of an epidemic like SARS will emerge. And of course, agriculture is affected.”
Since the first three H7N9 cases in people were reported in Shanghai and Anhui on March 31, a total of 24 human cases have been confirmed, mostly in Eastern China. As of April 9, there have been nine deaths. To prevent the spread of the virus, Shanghai authorities have banned all live poultry trade and ordered the slaughter and incineration of 98,000 birds. The live poultry trade has also been suspended in Shanghai and a number of other areas. It is hoped that China’s rapid response will limit the further spread of the virus. Following the incidents, however, JCI Shanghai reports that Chinese broiler prices have slipped to below RMB8/kg as of April 6, leaving a loss of RMB2-3/head for farmers. Consequently, the market is almost is stagnant and is expected to remain weak throughout the entire month of April as all concerned continue to assess the situation.
“The Council is aggressively monitoring the Chinese poultry and swine markets to determine what effect, if any, this will have on U.S. corn imports,” remarked Roepke. Currently, USDA forecasts China will import 2.5 million metric tons (98 million bushels) in 2013. Since China has already imported nearly 3 million tons (118 million bushels), with 77,000 tons (3 million bushels) in known outstanding sales, this estimate may need to be revised. The 2013 calendar year quota for corn imports remains at 7.2 million tons (283 million bushels), unchanged since 2004.
Authorities claim there is no evidence of the strain being transmitted between humans. The World Health Organization has praised China for its efforts to curtail the spread.