Although overall market demand for pork has been at a high level over the past few years, Japanese pork consumption started to trend moderately downward in 2012 which may continue into 2013. Despite this, imported chilled pork, which is mainly supplied by the United States and Canada, is expected to sustain its 2012 level, as long as its competitive price advantage over domestic pork prevails. A recovery in 2012 in Japan’s total hog slaughter and national output has put more competitively priced fresh/chilled domestic cuts into retail distribution, and this trend is expected to continue into 2013.
If Japan decides to relax its domestic BSE border measures, including those for imports, it may prompt Japanese retailers, who were compelled to feature more pork and Australian beef in their store shelves after 2003, to switch back to competitively priced American beef cuts. For example, American sliced short plate pack used to be the most popular barbecue meat with Japanese consumers. This may have an impact on the 2013 pork market outlook as well, especially for retail sales of domestic pork and imported chilled cuts.
In 2013, imports of frozen pork for processing use will continue to be subject to enhanced monitoring and inspection to enforce Japan’s pork differential duty system – the so-called Gate Price System. This increased focus in inspections may lead to an exit of brokers, which in turn may reduce speculative imports of cheap frozen cuts which have kept year ending stocks somewhat high in the past.
For 2013, Post projects total consumption in Japan’s pork market to decline by one percent to 2.484 million MT, and total imports to contract by two percent to 1.208 million MT, due mainly to an anticipated reduction in frozen pork imports. Therefore, year ending stocks are adjusted three percent lower compared with the year beginning level and is now estimated at 210,000 MT. Breakdowns for 2013 imports are: for pork cuts, down by two percent at 974,000 MT, and down by three percent for prepared/processed beef products at 234,000 MT. Post’s import projections for pork cuts by country are: the United States, down by two percent to 410,000 MT, Canada, unchanged at 208,000 MT with each country’s respective share at 42 percent and 21 percent. Combined total imports of frozen cuts from Denmark/EU countries are projected to be somewhat lower than 2012. The United States and Canada should hold the majority share of Japan’s imports of seasoned ground pork (in the prepared and processed products category). At these projected levels of pork cut imports and stocks, the pork safeguard is not expected to be triggered in 2013.
Slight Fall Projected for Japan’s National Pork Output in 2013
Constrained by low market prices, increased competition with imported chilled pork, and higher feed costs, Japan’s total 2013 domestic slaughter and national pork output are projected down by less than one percent to 16.4 million head (or 1.27 million MT). In light of the above, year-beginning total domestic sow numbers are projected to decline, reflecting an anticipated liquidation of some sow stocks.
Brazil May Become a Frozen Pork Supplier in 2013
In August 2012, Japan classified the South Catarina (SC) state in Brazil as a FMD vaccination free region, potentially allowing Brazil to begin supplying frozen raw material pork. An animal health protocol and certification requirements are currently being negotiated, and if these are concluded by 2013, the SC state could begin exporting in the same year. Initial trade volume from SC is expected to be small, and Brazil will likely be competing for a portion of the market that is currently held by Mexico and Chile (approximately nine percent in total pork imports in 2011).
Tuesday October 9, 2012/ FAS-USDA/ United States.