NEW YORK – The Chinese won't be the only ones celebrating during China's festival season. A new outlook report from Rabobank’s Food & Agribusiness Research and Advisory team notes a strong third-quarter performance and is forecasting steady increases in pork prices through the end of 2013 due to increased demand during China's holiday celebrations.
Rabobank's five-nation hog price index continued to climb, reaching a peak of 162 percent in August, slightly lower than the last peak of 165 percent in August 2008. The report attributed the index decline to the recovery of supplies of pork after the summer heat. Pork prices in the third quarter had double-digit increases in almost all major producing regions. Tighter-than-expected supplies of pork in the United States due in part to the impact of the porcine epidemic diarrhea virus (PEDV) was one factor in price increases; while the impact of the European Union’s group housing of sows in January 2013, and continuing robust import demand also contributed to rising prices, according to Rabobank.
Rabobank is forecasting that prices will remain high for the remainder of 2013, as producers are reluctant to expand sow herds in almost all producing regions.
For 2014, Rabobank believes declining feed costs will support limited increases in sow herds. Herd rebuilding, along with increasing productivity will likely lower prices. But limited growth in sow numbers, steady demand growth in Asia and still relatively high feed costs could curb growth in pork supplies at least until mid-2014 and mitigate price increases, Rabobank reported.