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INSIGHT: ASF Outbreak in Germany Slows Additives Buying in Europe

Source: Feedindo Logo Final

15 October 2020 - The rising number of African Swine Fever (ASF) cases in Germany has slowed feed additives buying activities in Europe in October, as some buyers held back in fear of potential demand downturn.

“Two weeks ago because of one boar, everything changed, suddenly no one wants to buy [amino acids] anymore,” said one Europe-based supplier in early October.  

“[Now] most of the customers are not taking positions. A few weeks ago they were ready to take positions but two weeks ago that changed, people are afraid because of ASF in Germany,” he added.

Another distributor in Europe also echoed a similar sentiment, saying “buyers are more hesitant”.

The first case of ASF was discovered in the wild boar population in the state of Brandenburg in northeast Germany in September and cases have increased to 69 by 14 October. However, domestic farmed pig herds in Germany are still free of ASF, according to the country’s Federal Ministry of Food and Agriculture.  

Germany is the largest pig meat producer in Europe, accounting for 23% of the European Union’s total output in 2016, data from Eurostat shows. Germany slaughtered 59.4 million pigs in 2016, followed by 47.7 million in Spain.

As ASF has not spread to Germany’s domestic pig herds, there has been no mass culling to control the infectious disease. However, many buyers have responded with caution and temporarily paused their plans for finalising amino acid contracts for delivery in the second and third quarter next year.

Several distributors said that some consumers prefer not to hold its usual level of inventory and opt to buy on the spot market rather than fixing longer-term contracts. As a result, enquiries for lysine, threonine for prompt deliveries in the fourth quarter remained high.  

Chinese-origin lysine HCl spot prices were last assessed at EUR 1.10-1.15/kg and threonine at EUR 1.12-1.15/kg, both on a DDP Europe basis, according to Feedinfo data.

A Chinese vitamin supplier was also wary of mass culling in Europe and said that would be an indication of feed additives demand downturn. Demand in Europe will be supported “as long as the animals are alive, as they will need to be fed,” said the supplier.

Germany is also one of the largest pig meat exporters to China and the Chinese government has banned German imports after the ASF case was announced on 10 September. Japan, South Korea, Singapore have also halted German imports since mid-September.  

Germany exported 264,400 tonnes of pork to China in the first seven months this year, nearly doubled the 133,900 tonnes in the same period in 2019, data from the country’s statistic office shows. Pig meat shipments to China account for about 26% of Germany’s total exports over the period.   

Short-Term Gains For Other EU Countries

China and the other Asian countries have switched to importing from European countries free of ASF, such as Denmark and Spain.

“In the short-term, it is beneficial to Denmark as many countries have switched to buying from Denmark. In the longer term, it will also be bad for Denmark, all the meat that will be exported to China will stay in Europe, Europe will be flooded with cheap pig meat,” said one market participant in Denmark.

Although Chinese demand remained strong in the short-term, Europe is ultimately the largest export market for Denmark. More than 70% of Danish pig meat output is exported to other EU countries, according to the Danish Agriculture and Food Council.

Furthermore, Germany imports piglets from Denmark for fattening and slaughter, and the Chinese pig meat import ban has hit the live pig trade between the two countries.

“Denmark exports 10-15 million piglets/year to Germany, that has of course dramatically decreased over the last few weeks,” said the source.

Piglets imports to Germany were already impacted by Covid-19 related demand downturn this year. Between January and July, 5.8 million piglets were imported, down 7% from the same period in 2019.

The lower piglets import indicates lower livestock and eventual slaughter number, which will lead to reduced feed consumption.  

Germany’s pig herd has already fallen this year to 25.4 million heads in May, down 2.3% compared with the same period in 2019, the country’s Ministry of Food and Agriculture data shows.