April 18, 2022

Rabobank forecasts slowdown in global swine trade

 

Inflationary pressure will slow growth and trade in the global swine industry, according to Rabobank.

 

This year, higher feed and energy costs are expected to pressure margins. Based on Rabobank's Global Pork Quarterly report, producers' returns will be challenged by rising costs and production growth is expected to slow, as it would also be the case for global trade.

 

A disappointing South American crop and the uncertainty of Black Sea grain exports are exacerbating an already tight global feed supply, increasing feed costs 20% year over year. Global swine producers will focus on efficiencies and limit herd growth, with expected declines in financially challenged regions including the United Kingdom, Germany and Southeast Asia.

 

Consumer demand remains mixed. Pork sales remain brisk in the US and South Korea, which have emerged from pandemic restrictions, while sales have lagged in countries like China, Japan and Mexico, which are still struggling with Covid-19-related dining restrictions and weaker economic growth.

 

Rabobank expected higher-cost pork to limit demand in the second half of 2022, despite improved in-home consumption and high-cost protein alternatives.

 

The global pork trade in 2022 is expected to decline, driven by weaker economic trends and ample pork supply. Slower exports in the second half of the year will likely continue, as buyers remain cautious due to global economic uncertainty and higher-cost pork.

 

By country, Rabobank released the following updates:

 

    - China: Demand remains weak on a new round of COVID-19 Omicron infections and lockdowns. Pork imports declined materially entering 2022;

 

    - Europe: Pig and piglet prices jump as supply contracts. Margin pressure through the chain remains as input costs rise;

 

    - North America: Record hog prices due to lower production are helping offset rising costs. Demand is stable but could weaken on higher prices and US dollar strength;

 

    - Brazil: Production is already affected by squeezed margins. Exports remain positive despite a drop in Chinese demand;

 

    - Southeast Asia: Both COVID-19 and African swine fever (ASF) are affecting Southeast Asian pork markets. Import policy changes are in favor of more imports;

 

    - Japan: The increase of pork imports will continue. Pork production remains flat.

- Rabobank