Rabobank: Pork Industry turning the corner to improved profitability
Herd contraction is slowing as the industry recognizes improved supply-demand balance. After several months of decline, sow herd numbers in key regions are beginning to stabilize. With a return to growth in the breeding herd unlikely before late 2024 or early 2025, pork supplies will remain constrained in the coming months. Productivity gains are also boosting production. Better herd health in the US, Canada, and China is helping stabilize production, boosting hog availability.
Lower feed costs are offsetting other cost inflation and enabling the industry to return to profitability. Higher global stocks of grains and oilseeds have reduced feed costs for most producers. Despite early season concerns, a good South American crop has added to the inventory – putting additional pressure on prices. Growing conditions remain top of mind as the Northern Hemisphere enters the 2024 spring planting season.
Pork remains well positioned as a lower-cost protein option for consumers, particularly given the steady increase in beef costs. While lower-cost items continue to see outsize gains and there is a trend toward more frozen product, consumers’ move toward more in-home meal preparation continues to benefit retail pork sales. As the rate of inflation peaks, there should be a gradual recovery in sales of value-added and processed meats.
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