Feed Bussiness Worldwide: May 2015
 
A flat, divergent world swine
 
by Eric J. BROOKS
 
 
Although the world swine sector's long term prospects have never been brighter, the industry faces a third consecutive year of lower output, flat exports and historically high prices. Just as the cloud PEDv cast over the industry lifted, along came China and Russia.
 
China's drop in pork production must be added to a 418,000 drop in the pork output from the 100+ countries responsible for just 25% of world pork production. With China accounting for over half of world pork production, it essentially means that about 80% of the world's hog farms will produce less pork this year than in the previous one.
 
Even though American pork output is enjoying a one-year boom, this cannot offset slashed production forecasts for other leading producers including China, Brazil and Russia.
 
As a result, world pork production is expected to only rise 0.4%, its smallest rise in over a decade.
 
While production is hurting, trade is suffering even more, with the USDA expecting world exports to stay flat at 6.816 million tonnes, 1% less than last year's 6.816 million. It is the third straight year of declining pork exports.
 
The 2013-14 downturn in exports has given way to a whole new slew of problems. While China's waning ability to export pork is a factor, a larger real reason looms further to the north.
 
Russia's ban on western meats has seriously dented pork export expectations for the US, Canada and European Union. Because mounting economic problems have also reduced its aggregate demand for pork imports, Russia's overall impact on the world pork trade was more devastating than was initially expected. With its consumption falling by 8.8% from 2014 levels and down 15.5% since 2013, import volumes will fall by even more than domestic demand or output.
 
While Russia's ban also boosted pork exports from Brazil, it was not nearly by enough to offset the combined deflationary impact of its embargo on western supplies and falling meat consumption.
 
But pork consumption has problems that go beyond Russia's geopolitical antics. On the demand side, fast expanding developing regions such as China, Southeast Asia and Russia itself are watching their economies decelerate, denting their pork consumption growth.
 
On the supply side, America, which supplies 31% of world pork exports has seen its currency shoot up in value by 20% to 35% not just versus rival exporters, but also against the currencies of major importing countries. This creates a situation where demand growth decelerates, but most of the supply growth occurs in the most expensive exporter.
 
It is also a time when each major producer is out of sync with the others.
 
Number one ranked producer China is in a recession, number two ranked America is booming. Major importers like Russia are being impacted by currency market changes - but so is the top pork exporter.
 
With major pork producing countries more out of lockstep than they have been in years, in the pages that follow, we take a closer look at the top four exporters and the world's largest, most dynamic pork-consuming market.
  
      
  
The full article is published in the May 2015 issue of FEED Business Worldwide. To read the full report, please email inquiry@efeedlink.com requesting for a complimentary copy of the magazine. The request should indicate your name, mailing address and title of the report.
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