December 21, 2016

 

Meat prices seen under pressure in supply-driven market in 2017

 
  

Meat producers will be faced with a supply-driven and more competitive market next year, which will put pressure on prices and margins, even if global meat consumption continues to rise, says a new report on the global outlook for animal protein released by Rabobank in December.

 

"In a market driven by supply, we expect prices to come under pressure next year—a boon to consumers, but a clear challenge for producers and processors", said Justin Sherrard, the agricultural lender's global strategist for animal protein.

 

He said that with rising demand, China is forecast to maintain its 2016 record levels of pork imports next year and could increasingly seek something akin to "imports-plus", locking in supply as it targets food safety and security for its growing population.

 

The annual animal protein outlook report, entitled "Prices under Pressure in a Supply-Driven Market: Global Outlook for Animal Protein in 2017", said China would continue to exert a huge influence on global meat markets. The world's most populous country increased pork imports to record levels in 2016, and Rabobank forecast that these import levels would remain constant next year. China's beef and poultry imports are also expected to rise.

 

In the US, production is expected to continue growing, but consumers' appetites are being tested as record levels are reached, the report said, adding: "The strong US dollar and uncertainty over future trading relationships with China and Mexico create potential headwinds for American producers". The US is currently the world's largest exporter of pork to China, excluding the EU.

 

Changes in trade policy

 

Also, US producers should expect to grapple with possible changes to the country's trade policy and further currency movements, according to Sherrard. "Indeed, with worldwide currency fluctuations depending on political machinations as well as central bank decisions, we are becoming accustomed to expecting the unexpected", he said.

 

The focus on antibiotic use, the attention on livestock as a source of greenhouse gases, and growing retailer competition will be additional pressure on producers in 2017 to adapt their systems to mitigate these threats, according to Rabobank.

 

"This complexity is creating new growth opportunities for the producers and processors that read the market well and respond swiftly. They are likely to respond by strengthening supply chains, coordinating inputs and increasing transparency to improve traceability in supply chains", it said.

 

Justin Sherrard added: "The onus is very much on producers to mitigate the concerns of consumers, particularly around animal health and welfare issues, by adapting their production models and supply chains. This is a challenge which will continue to be a major theme in 2017".

Video >

Follow Us

FacebookTwitterLinkedIn