UTRECHT, NETHERLANDS — Rabobank’s quarterly report for the second quarter of 2024 indicated a pivotal shift in the industry as sow herd numbers began to plateau after a period of decline. Factors like better-than-expected consumption trends and reduced production costs across most regions contributed to an optimistic outlook for hog prices.

According to the report, conditions are ripe for more producers to rebuild their herds. However, producers in regions with ongoing health challenges or higher regulatory costs may experience a slower recovery pace.

“The industry’s improved supply-demand balance has led to a slowdown in herd contraction,” said Christine McCracken, senior analyst of animal protein at Rabobank. “Although meaningful growth in the breeding herd is not anticipated until late 2024 or early 2025, productivity enhancements are contributing to increased production.”

Rabobank noted that the United States, Canada and China are seeing healthier herds, which is translating into greater hog availability.

Also contributing to a boost for the industry, global stocks of grains and oilseeds have run higher, leading to lower feed costs. South America reaped a robust crop that further pressured prices and provided relief from other inflationary costs. The continent’s crop success benefits producers around the world, as South America accounts for roughly 15% of global corn production and 55% of global soybean production. As the Northern Hemisphere approaches the spring planting seasoning, all eyes are on the growing conditions that will influence future feed costs.

Rabobank predicted a modest improvement in global pork production this year thanks to improved economic conditions for several regions and a favorable cost of pork.

Key Asian markets took a dip in consumption during the first quarter of 2024, but pork maintains its position as a cost-effective protein choice for consumers worldwide.

“This is particularly significant in light of rising beef prices,” McCracken said. “The trend toward frozen products and home cooking is expected to continue bolstering retail pork sales, with a projected uptick in value-added and processed meat sales as inflation rates peak.”

In the European Union, pork consumption is expected to stabilize as pork prices normalize after months of elevated levels. Meanwhile, North America per capita pork consumption is expected to remain flat to down.

Rabobank expects a slight rebound in pork exports in 2024 driven by the stabilization in production.

The European Union’s decline in production and reduced import demand have left a significant hole in global export markets, according to Rabobank. Competing nations, primarily those in North and South America, have quickly begun to fill that hole now that the European Union has forfeited 7% of global pork export market share since 2020.

On a whole muscle basis, the United States is set to overtake the European Union in annual pork export volume. The United States started the year off strong up 9.8% year over year through February at 483,000 tonnes. Rabobank predicted further growth in 2024 by 6%. Meanwhile, the European Union’s pork exports dropped 10% year over year this past January. Rabobank noted that the country’s shipping costs being higher than the United States’ might be negatively impacting its market share.

Brazilian pork exports are projected to outpace those from Canada. After Brazil recorded the best February in history in volume and value, March shipments fell 5% compared to the previous month. However, Rabobank expects an improved supply-demand balance for pork in China the second half, boosting Brazil’s exports.

During the first two months of 2024, China’s pork imports dropped steeply by 40% compared to the same period last year. Rabobank attributed the decline to weak local markets and large frozen inventories of imported product — factors that Rabobank believes are changing. A rebound in the second quarter is anticipated.