October 31, 2023

 

Global pork industry shows signs of recovery

 

The global pork industry, which has faced substantial production challenges in recent years, is beginning to see signs of recovery in key regions, according to Rabobank's fourth-quarter global pork report, Meat + Poultry reported.

 

While animal diseases remain a concern, improvements in overall herd health are noted.

 

According to Christine McCracken, senior analyst of animal protein at Rabobank, a renewed focus on cost reduction, driven by inflationary pressures and the elimination of less productive operations, is contributing to a resurgence in production per sow. While this trend is cost-effective, the increased production is compounding regional oversupplies and putting pressure on the market.

 

Breeding herd reductions remain slow outside of Europe and South Korea, likely due to optimism regarding favourable pricing and lower raising costs. Rabobank highlighted that lower corn and soybean prices in the third quarter of 2023, following a robust North American harvest and expectations of a large South American crop, have led to feed cost reductions ranging from 20% to 30% compared to the previous year in most regions.

 

Despite this, other rising costs, such as labour, insurance, and financing, remain high for most producers. An emerging El Niño pattern will shift the focus to potential impacts on the South American growing season.

 

From a consumer perspective, pork markets continue to perform steadily, as pork remains a dietary staple. Consumers are adapting to inflationary pressures, leading the industry to closely monitor shifting preferences for packaging types and sales channels.

 

Christine McCracken said that as consumers still cautious, particularly in light of rising geopolitical uncertainty, they expect an ongoing focus on reducing spending. Pork consumption should benefit from the high cost of competing proteins and more consumers cooking at home.

 

Rabobank predicts that in 2024, steady pork consumption will continue despite uncertainty about the economic environment. But global pork importers are cautious due to disappointing holiday demand, currency volatility, and rising geopolitical risks. August saw trade declines in China, South Korea, and the United States, with only shipments to Canada and the United Kingdom showing gains.

 

For the fourth quarter of 2023, Rabobank expects global trade to remain slow due to large inventories, relatively high domestic production, and low pork prices in key importing regions. In the US, August pork exports dropped 1.5% in value but remained flat year-over-year in volume at 226,519 tonnes. With competitive pricing, Rabobank anticipates steady US exports throughout the year, but growing frozen inventories and weaker demand in some markets may pose challenges.

 

In China, swine prices have fallen by 8% in the past 1½ months. Rabobank is optimistic that, with a stable pork supply in the fourth quarter, seasonal demand and increasing consumption will lead to strong performance in China's pork markets.

 

-      Meat + Poultry