Rabobank: Reduced pork production slows global economic growth

Global pork prices have risen sharply in most markets as processors scramble to find stable sources of supply. Higher disease losses in key growing regions, along with the delayed impact of processing during the pandemic, have resulted in limited available hog stocks.

Rabobank expects a gradual recovery in livestock numbers, but higher rearing costs and demand uncertainty are expected to slow the pace of growth in the global pork sector. Lower production expectations have left the market short of pork as demand begins to pick up. The imbalance leads to a sharp increase in the price of pork in many markets, which is slowly passed on to consumers and contributes to general inflation trends.

And this fact will be taken into account when preparing the monthly analytical report Meatinfo.ru

Key results for Q2 2021:

China

Pig herd losses due to new ASF outbreaks and health concerns are slowing the industry's recovery. Although the sow population is below previous expectations, it has not changed compared to 2020 and will increase until the end of the year as efforts to restore the stock continue. Even with a projected increase in production, China remains in a pork deficit and the country will continue to import pork products. Demand is weak due to the pandemic and high relative retail pork prices.

USA

Pork prices have risen 68% since the beginning of the year on the back of reduced supply of pigs on the market and high pork prices. Strong demand for ham and bacon, along with lower imports and limited frozen stocks, remains a positive for the industry. The availability of labor remains a problem and contributes to the increase in the cost of production. High pork prices are negatively affecting exports and are likely to remain a limiting factor for increasing export volumes.

Europe

Since the beginning of the year, pork prices in the EU have risen by 22% due to a shortage of pork and a gradual improvement in demand. While prices are still well below last year's export-led levels (-16% YoY), higher prices will help offset higher feed costs. Even under difficult conditions, production is growing in Spain, Denmark and the Netherlands to offset slight declines in Germany and Italy. Exports remain strong despite ASF-related German pork trade bans.

Brazil

Growers are struggling to make up for a 99% increase in feed costs due to planting delays and a disappointing first harvest. Weak domestic demand for pork due to covid restrictions and the end of economic stimulus is offsetting the gains from record exports, weighing on hog and pork prices.