NEW YORK – Stronger margins are ahead for the global pork industry in 2012, according to a new report from Rabobank. Despite moderate price pressure and a temporary increase in the beef supply, pork prices should recover strongly, Rabobank said. Prices will remain high as feed prices and disease problems in some countries hinder pork production.
Chinese imports are expected to be slow but strong. Demand for pork in China will be a key driver behind future prices, Rabobank said. Another key indicator will be how well pork imports to China rebound in February following the Chinese New Year celebrations.
Rabobank expects pork producers to get a break on feed because feed prices will be flat to slightly higher in 2012. Analysts forecast for grain and oilseed markets indicate slightly declining prices, but weather will be factor.
Disease concerns continue to hound China and Russia, impacting pork production in those countries, according to Rabobank. There are clear signs of foot-and-mouth disease in China ad African swine fever in Russia.
Rabobank named Europe as the wild card in the global pork picture. Strong exports supported by a weakening euro relative to the US dollar are expected to tighten pork supplies in the European Union. But the effect of the credit crisis on European GDP growth is effecting markets and capping pricing.
The pork industry is expected to build on recent gains as feed prices stabilize and strong pork prices spur margin expansion. Key drivers of long-term profitability include the industry's ability to maintain a disciplined supply/demand balance and prepare for future volatility.