June 20, 2022

Rabobank: EU-UK pork productions dropped in February while exports down in March

Pork productions of the European Union and United Kingdom need to decline to rebalance supply and demand, according to Rabobank.

Piglet and carcass prices have a high supply and demand sensitivity as the market attempts to rebalance and reduce oversupply.

Both EU and UK pork productions contracted by 2.5% year to date in February 2022. However, on the demand side, exports were also down by 30% year to date in March 2022 (439,000 tonnes) compared to the same period last year, with volumes to China declining by 60% year to date.

China's import demand is expected to fall by over 20% in 2022. With imports for April year to date 55% below the same period in 2021, Rabobank expects that demand will pick up in the second half of 2022. Hence, supply in Europe will need to contract to restore margins.

Assuming that EU-UK exports decline to 3.5 million tonnes over the next two to three years and that domestic consumption remains at 2021 levels (19.5 million tonnes), Rabobank predicts that pork production should contract by 6% (one million tonnes) compared to 2021.

In the case that consumption drops by 2.5% compared to 2021, EU-UK pork productions would need to decline by 8%, Rabobank said. For 2022, Rabobank expects EU-UK pork productions to decline by at least 2% year over year, driven by a sharp contraction in Germany.

- Rabobank