November 6, 2024

 

Pork producers careful about rebuilding pig herd as uncertainties hang over

 

 

Despite improved profitability, pork producers worldwide are cautious on herd rebuilding due to ongoing trade, disease and demand uncertainties, according to a recent RaboResearch report.

 

Although pork consumption is trending positively, logistical challenges and potential impacts from La Niña further complicate the market.

 

Changes in the Mexican and Japanese administrations, the US election, and the trend toward regionalised trade could create a less supportive trade environment for pork in 2025, the report explains.

 

"Retaliatory trade actions like China's anti-dumping case against the EU also highlight the global industry's need to remain nimble. Recent labor and weather-related logistical challenges only compound trade uncertainty and highlight the need to build domestic demand and diversify markets," the report says.

 

There's been little sign of expansion to the global sow herd through Q3 2024, but profitability has improved in some regions.

 

"We expect a seasonal production increase as temperatures cool and fresh corn becomes available, though herd health challenges typically rise during this period," said Christine McCracken, senior animal protein analyst for RaboResearch.

 

Ongoing disease threats continue to keep producers on their toes. Biosecurity should remain a top priority, the report acknowledges. Outbreaks of disease in South Korea, Russia, and the European Union have led to production losses in 2H 2024, limiting herd rebuilding despite effective biosecurity measures.

 

"China's moderating disease pressure should support a return to herd growth in 2025," the report says. "Slight production growth is also expected in Brazil, the US and southern EU countries."

 

Global feed inventories are nearing their best level in years, and hog production costs are lower in most regions, the report points out. Still the dry conditions in South America and Asia are a reminder that feed cost advantages are not the same everywhere.

 

Lower corn and soymeal costs in 2024 have provided margin relief in some regions, but tighter wheat supplies have kept costs high in others. Even a mild La Niña creates regional disparities, McCracken cautioned. North America's large harvest has helped rebuild stocks, but the EU and Asia have fallen short.

 

"With global stocks providing an adequate buffer, we project another year of moderate cost of gain for most leading pork producers in 2024/25," McCracken added.

 

Concerns about localised production shortfalls due to La Niña are focused on South and Central Asia, southern South America, northern Mexico, and East Asia. Dry conditions in Brazil have already delayed soybean planting and could reduce safrinha (second crop) corn acreage in 2025, the report notes.

 

Pork consumption is on the rise, driven by improved economic trends. Lower energy costs are helping to slow inflation, though higher costs for services and food weigh on consumers, the report says. The high cost of competing proteins and stronger seasonal demand should support favorable pork consumption in the fourth quarter.

 

"Consumer confidence remains a challenge in many markets due to ongoing economic difficulties," McCracken said. "Consumption trends will impact prices, investment decisions, and global trade."

 

-  Farm Journal's Pork