September 13, 2018
As pork prices fall, trouble seen ahead for global pork trade
Troubled by new tariff measures, the spread of African swine fever and rising global production, not to mention the anticipated rise of feed prices, global pork trade faces uncertainty even as pork prices have been falling in recent months, according to AHDB Pork.
"The global pork outlook is perhaps the most uncertain it has been for a long time", an analysis from the pork division of the UK levy body Agriculture & Horticulture Development Board said.
AHDB Pork said that based on prices from the four major exporters (the EU, US, Canada and Brazil), the pork export price averaged $2.55 per kilogramme in the second quarter, which is $0.08 lower than in the previous quarter and the lowest quarterly average for over a year.
Brazil experienced the sharpest fall in price, with pork exports averaging just $2.03/kg in the second quarter, $0.11 lower than in the first quarter. "This reflects a sharp fall in global demand for Brazilian product, as Russia shut down imports at the end of last year. This significantly reduced Brazil's export volumes, which fell 19% year-on-year across January-June", AHDB Pork said.
While US pork exports were 7% higher in the first half, rising production and disruption to exports have weighed on the market. However, according to AHDB Pork, exports were beginning to slow in volume terms, as tariffs limit shipments to China and Mexico.
Price declines in the EU market this year have been relatively modest as the average EU export price in the second quarter was $2.72/kg, which is $0.17 (7%) above the global average and just $0.07 lower than in the first quarter.
The modest decline was influenced by the weakening of the euro against the dollar, and in euro terms export prices were stable across much of the first half. EU exports have not experienced the same disruption as the other key exporters, so prices have largely been able to hold more firmly, AHDB Pork said. Nevertheless, in June prices dropped to $2.59/kg, in line with US levels.
Import demand from China will play a key factor in the recovery of pork prices in the major exporting markets, and given the high tariffs on US pork, Brazil, Canada and the EU, according to AHDB Pork, "are better placed to benefit from any uplift in import demand at the moment, which may help support prices in these areas".