Rabobank: ASF, Inflation, and Policies Challenge Growth While Trade Prospects Rise
Feed and energy costs are offering a break, but not quite relief. Feed input prices have softened in some markets but are expected to stay relatively strong for the rest of 2022. This will lessen the pressure on producers to some extent. However, price volatility in grains and oilseeds will bring extra management risks and challenges.
Consumer demand remains mixed. Demand remains strong in North America and is improving in the EU, a reflection of seasonal movement more than a structural change. Japan, South Korea, and some other Asian countries, however, expect weaker demand in 2H due to rising inflation concerns, the slowing economy, and ongoing Covid risks. China’s pork market is still subject to uncertainty around Covid policy measures, which led to a marked decline in foodservice in 1H, but is looking more positive for 2H. In Brazil, producers and processors are finding it difficult to pass on all the additional costs to consumers.
China: Hog prices are surging due to tight supply and demand improvement. Policies are being introduced to stabilize prices and control inflation.
Europe: Pig prices are supported by tighter supply and summer demand. Europe diversifies its exports as volumes to China remain low.
North America: Producers remain profitable on hog market strength and lower feed costs. Demand remains stable but is expected to weaken as the economy slows.
Brazil: Farming margins are improving but still face challenges. Exports remain under pressure with a drop of 9.8% YTD.
Southeast Asia: Pork prices have been rising in Vietnam due to tight supply. Imports are expected to increase in 2H.
Japan: High prices are slowing domestic pork consumption. Pork imports remain strong.
Global pork trade in 2H 2022 is expected to pick up from the low level in 1H, mainly due to the expected rise in import demand from China. Pork prices in China have increased greatly in the past month and are expected to stay high in 2H, which supports imports. Other traditional importing countries, such as Japan, also expect imports to remain firm.
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