Will Germany’s Declining Swine Herd Impact U.S. Soybean Exports?

Soybeans in hand ( MGN Image )

For years, Germany has been a global pork leader and is currently the world’s second-largest pork exporter after the United States. But the latest USDA Foreign Agricultural Service Global Agricultural Information Network (GAIN) report says domestic demand for pork is waning and production is declining.

Swine herd numbers in Germany are reaching near 20-year lows, which in turn is causing a corresponding decline in pig feed demand. This causes great challenges for the U.S. as it’s currently the top exporter of commodity soybeans to Germany.

Although the German pork sector has experienced periods of growth within the past two decades, the GAIN report says recent market declines have reduced production to its lowest level since 2001, when the German swine herd totaled 25.8 million head. In 2012, 2014 and 2015, the German pork sector reached its highest production levels, with the swine herd totaling about 28.1 million head in each of those three years. 

Since then, there has been a downward trend, with the swine herd reaching a low of 25.9 million head in May 2019. USDA FAS says this downward trend is likely to continue as German hog farmers continue to exit the market.

The German swine herd decreased by 4.1% between November 2017 and November 2018. In the first half (July-December) of the 2018-19 marketing year, pig feed consumption was down by 3.3% compared to the first half of the 2017-18 marketing year.

“Germany relies heavily on oilseed imports—namely soy and rapeseed—for protein in animal feed rations, particularly swine feed rations,” USDA FAS says. “Around 25% of Germany’s annual protein feed supply is derived from imported soy or rapeseed. On average, soybean meal makes up 5% of German swine feed rations, with a maximum soybean meal level of 20%.”

In 2018, the U.S. was Germany’s largest supplier of commodity soybeans, with direct sales of $532.56 million to Germany in 2018. During the 2017-18 marketing year, Germany produced 23.9 million tons of compound livestock feed. Of that amount, 9.61 million tons were swine feed, the report said. 

“The hog herd is falling in Germany. Through the first six months of 2019, soybean exports to the EU-28 are down about 4.7 million bushels from a similar period in 2018. Exports to the Netherlands and Germany fell by approximately 23.6 million bushels,” says University of Illinois agricultural economist Todd Hubbs. 

However, soybean exports to Spain, Portugal, France, Belgium and the United Kingdom have increased by 18.8 million bushels over the same period, he says. 

“Increased exports of pork to China are benefiting other EU countries. I expect this to continue while African swine fever remains a problem,” Hubbs says. 

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