African swine fever to complicate dairy sector

The contraction in the supply of pork from China as African swine fever looms will result in demand for other animal proteins, says Rabobank.

“The current African swine fever (ASF) epidemic is expected to reduce China’s pork production by up to 35%, resulting in increased demand for other animal proteins. Rising demand for beef could constrain China’s milk production if dairy cow-culling accelerates to fill some of the gap in animal protein,” said Rabobank’s senior dairy analyst, Sandy Chen.

Herd recovery could take years, and meanwhile, fewer hogs translates into lower demand for feed, which has negative price implications for key dairy ingredients: milk permeate, whey permeate, whey powder and lactose, all used in swine feed.

“The forecast 150mmt to 200mmt reduction in pigs represents an estimated 54,500mt to 72,500mt decrease in lactose demand in piglet feed,” said Rabobank’s global dairy strategist Mary Ledman.

“The ASF situation in China has had a double impact on US whey, permeate, and lactose exporters as the world’s largest market for dairy-derived animal feed shrinks and US competitiveness erodes due to the trade war-induced tariff,” says Ledman.

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