Global pork markets find stability
UTRECHT, The Netherlands – Global pork markets will be stable, with a modest recovery during the second half of 2012, according to Rabobank’s quarterly global pork market outlook.
Key drivers in the global market will be the success of the grilling season in the Northern Hemisphere and prospects for Asian imports. Producers will also need to remain vigilant about crop production developments.
“As always, producers will need to monitor crop production developments as we remain in a ‘no margin for error’ feed supply situation,” Rabobank said.
Global hog prices have softened recently, although prices are still high by historical standards in order to offset high feed prices, according to Rabobank’s report. China’s pork supplies are continuing to recover. Soft hog prices have prompted China to order procurement for its frozen pork reserves, and Chinese hog prices are projected to rebound by the end of 2012. Rabobank’s extended forecast calls for global protein consumption to lag income and population growth in emerging markets. This will raise volume risks for processors and price risks to buyers, including processors and consumers.
The global pork market is normalizing on a decline in imports to Asia which saw disease severely impact its hog supplies. The United States has felt the impact of the decline in export growth most keenly. But exports from the European Union are another story, according to Rabobank.
“Remarkably, exports from the European Union (EU) continue to perform strongly with an increase of 17 percent in Jan. –Feb. 2012 compared with Jan.-Feb. 2011 and just a slight decline (-1.5 percent) compared with Nov.-Dec. 2011, but here also some pressure can be expected in the coming months,” the report stated.
Barriers to trade remain, Rabobank said. Brazil is still barred from exporting pork to Russia, and the strength of the Brazilian currency has kept Brazil’s pork prices low. Farmers in South Korea and Taiwan have protested against imports because of falling pork prices.
Production declines in Europe, aligning with production growth in the US and potential herd liquidation in China will be the primary driving forces behind the global pork market in the second half of 2012, Rabobank said. However, barring any new major events, Rabobank is forecasting a stable market.