UTRECHT, NETHERLANDS — African swine fever will be the dominant issue in global animal protein heading into 2020, with China the main focal point, Rabobank said in its latest update on the issue.

“The ongoing spreading of the disease, and the price response to the impacts of ASF are rightly under the spotlight,” said Justin Sherrard, Rabobank global strategist — animal protein. “The market is improving its understanding of the issue and its near- and longer-term implications, but uncertainty is just as much a part of the picture.”

ASF continues to spread across Asia with a possible second wave of outbreaks in northern China and there are continuing occurrences in Europe, Rabobank said in the report.

Pork prices in China have surpassed record levels and more government intervention is expected.

Rabobank said China’s total feed demand is likely to rebound by 8% in 2020, with hog feed consumption bottoming out by the second half of the year. The market will benefit from herd rebuilding and the shift from small to larger-scale farms.

Some farmers are extending the fattening phase to gain heavier weights, boosting feed usage. Hog feed demand is expected to rebound 5% year-over-year, Rabobank said.

Poultry feed will see even higher growth due to substitution and high rearing margins, it said.

Soymeal usage is estimated to decline by 6% year-over-year in 2019, compared with a 17% drop in total feed demand, based on a higher inclusion ratio, Rabobank said.

In 2020, if the inclusion ratio remains high, China’s soymeal usage would rebound by 8%, in line with total feed usage; if the ratio returns to low levels, it could be another year of decline.

The ongoing U.S.-China trade talks will impact feed corn and soymeal usage, it said.

“If the U.S. and China ratify a ‘phase one’ trade deal, China’s soymeal usage could rebound, while feed corn would be partially substituted by imported U.S. sorghum and DDGS,” Rabobank said. “But if a trade deal is not reached, Chinese feed mills could cut soymeal use and stick to using local feed corn in the feed ration.”

Trade is increasing across the species. China’s imports of pork have continued at strong levels, testing global supply availability and driving up prices, Rabobank said.

“Other countries affected by ASF have yet to lift their imports, which will further tighten global supply,” Rabobank said. “A breakthrough in the U.S.-China trade war would help increase availability to China, without affecting the global balance.”