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USDA GAIN: Livestock and Products


10 April 2014

USDA GAIN: Republic of Korea Livestock and Products Semi-annual 2014USDA GAIN: Republic of Korea Livestock and Products Semi-annual 2014

Efforts by Korean swine producers to reduce sow numbers in 2013 bore some results in keeping the total inventory from rising further and will definitely bring down the inventory in 2014. As the effect from lower sow numbers impacts the piglet production in 2014 and with higher losses of piglets due to PED, total slaughter numbers will drop and will result in decreased pork production in 2014. Some of the shortage in domestic production will be filled with increased pork imports.

USDA GAIN: Livestock and Products

Commodities:

Animal Numbers, Swine

Production:

The efforts by Korean swine producers to reduce sow numbers in 2013 bore some results in keeping the total inventory from rising further. But as the reduction in sow numbers did not take place until the second half of 2013, it was not effective in reducing the total inventory in 2013. However, the reduced sows will definitely bring down the inventory in 2014. The effect of lowering the sow numbers is expected to begin to have an impact on the total inventory about 10 months later, considering the 4 month pregnancy period and about 6 months needed to raise the piglets. Therefore, the impact of a low conception rate during the 2013 summer coupled with efforts to reduce sow numbers will begin to have an impact on total inventory in 2014. The piglet production and ending inventories in 2014 is based on the drop in sow numbers during the second half of 2013. However, it remains to be seen how long the effect from lower sow numbers will last as compound feed sales for sow in January 2014 increased by 3.9 percent over the level in December 2013.

Swine producers are claiming that carcass prices need to be over 3,700 won/kg in order for producers to avoid a loss. However, as can be seen from the above table, the carcass prices have continued to be over that price level during the second half of 2013, except for in October. This may be one of the reasons why sow feed production may have begun to increase in January 2014, as farmers may feel more confident about swine prices in 2014.

Commodities:

Meat, Swine

Production:

As efforts to reduce overall inventory of swine in 2013 through increased slaughters did not occur until the second half of 2013, total pork production remained at record high levels in 2013. However, as the effect from lower sow numbers impacts the piglet production in 2014 and with higher losses of piglets due to PED, total slaughter numbers will drop and will result in decreased pork production in 2014. Another factor that will reduce total pork production is the government’s plan to change the grading system for pork. The grading standard for pork that went into effect as of July 1, 2013 will result in a drop in average carcass weight. The government decreased the 7 different pork grades into 4 grades to help the consumers understand the quality of pork that they are purchasing. The 4 grades are; 1+, 1, 2 and off-grade. The change in grading system also lowered the ceiling for carcass weight to minimize the fat content in single-rib belly. In order to receive a 1+ grade, the range of carcass weight must be between 84~93 kg. Previously, the range for 1+ grade was 83~96 kg. (For a more detailed explanation, please see KS1343).

Consumption:

Pork consumption in 2014 is projected to increase by less than 1.5 percent as domestic pork prices are anticipated to increase due to lower production. Some of the shortage in domestic production will be filled with increased pork imports.

As can be seen from the following consumption pattern, the amount of single rib bellies which traditionally has been the most favorite and most expensive cut is gradually dropping, whereas consumption of pork ribs, collar butts and loin are increasing. Such phenomena are due to promotional activities by the Korea Swine Association to increase the consumption of non-pork belly cuts, thereby increasing the overall profit return to producers. The highest increase was in picnic and ham consumption, indicated by the increase in processed pork products. The government has allowed the manufacturing of sausages and processed pork products within the butcher shops to encourage consumption of processed pork to increase the sale of non-pork belly cuts.

Trade:

Pork imports are projected to increase in 2014 as domestic pork production drops. However, the United States will have to overcome price competitiveness with its EU suppliers as U.S. pork supply is expected to be very tight this year caused by the PED outbreak in the United States.

To view tables and other data, please download the document

April 2014

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