Global pork market, still dominated by uncertainties
The global pork market is under stress for almost three years, since the beginning of the ASF crisis in China. Despite the fact that for two years, almost every major pig producer country in the world has capitalized on China's high demand for pork, nowadays everyone is concerned about the increase in production resulted from a rapid herd liquidation that occurred in the last six months in China.
"Great volatility in Chinese hog and pork prices is rippling through the global market. China’s slaughter rates were unexpectedly high in Q2, pushing pork production up 35.9% YOY in 1H, according to official data. The sudden supply increase resulted in a sharp price decline and negative results in both farming and trading in 1H, pointing to low pork imports into China in Q3. While we expect hog and pork prices to rebound in Q3, the estimated high frozen pork inventory will impose a lot of downward pressure on prices. We expect the slowdown of imports in the coming months will reduce full-year imports from 2020’s record levels by 10% to 20%. This will lead to a redistribution of pork trade in the global market and could place downward pressure on pork prices in exporting regions," says the latest quarterly report released by Rabobank.
Meantime, in the US analysts are foreseeing a moderate production for the rest of the year as disease loss, lighter slaughter weights, and high feed costs will take their toll on the sector.
In Europe, the strong growth (5%) in production seen in the first half of the year will not continue over Q3. High feed costs and softening exports will limit production growth in Q3, according to Rabobank. Also, new ASF outbreaks in German domestic pig farms add new risks.
In Brazil, pork production started the year at a good pace, due to 2020’s positive results (mainly in exports). However, high feed costs will discourage further production growth in the coming months in some regions. In terms of demand, the atypical increase in beef prices in the first months of 2021 following dry climatic conditions has favored the consumption of chicken and pork.
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