March 14, 2022

Slow Chinese demand, feed costs attributed to expected drop in EU pork production

The European Union's pork production is forecast to fall based on slowing Chinese demand combined with rising feed costs, according to the United States Department of Agriculture (USDA).

Even then, the bloc is anticipated to be able to maintain or even increase its pork export levels in 2022.

The surge of Chinese demand for pork in 2020 brought optimism to the EU pork sector, which initiated an increase in the supply of piglets in the same year.

However, with slow Chinese demand and the rising costs of feed, energy and labor last year, the outlook for the sector deteriorated, and the sow herd was cut by 3.6% to a new record low.

Major cuts are forecast for Germany and Poland. Even in Spain, which has shown steady growth in slaughter since 2013, a leveling-off of slaughter is anticipated in 2022. The lower supply of piglets will eventually lead to a reduction in the slaughter of hogs and reduced pork production.

While slaughter is not expected to decline in nearly half of the EU's member states, a decline is expected among the bloc's leading producers: Spain, Germany, France, Denmark, the Netherlands and Belgium. But, France's slaughter is forecast to increase slightly this year as ending stocks are expected to have increased in 2021. Still, the country is expected to see lower pig numbers in 2022.

Taken as a whole, EU slaughter is projected to decrease to 247 million head and pork production to 23.3 million tonnes CWE. Ending inventories in 2022 are forecast at 140 million head.

However, based on high commercial stocks developed in 2021, the EU swine sector has the volume available to sustain or even increase pork exports this year.

Through its export diversification efforts, the EU will not be as reliant on Chinese demand. But, ff export demand falls short, it is anticipated EU pork stocks will further build, pressuring prices and profit margins.

- USDA