Looking ahead to the second and third quarter of 2017, Rabobank says pork export projections look favorable for the industry. Rabobank Research Food and Agribusiness analysts find that a stable market is ahead into the third quarter as increased U.S. pork production is being absorbed into Asian export markets. The report on National Hog Farmer Dot Com says the industry is keeping a close eye on what’s going on with Chinese pork imports, both now and in the months ahead. Rabobank analysts report that “steady, regulatory-driven relocation of pork production will support a good price level and stabilize imports in the coming months.” Rabobank reports that the pork markets are also performing well in Japan and South Korea. Consumption in Japan is up over 4 percent in January-February, year-over-year, marking three years of increased pork consumption by Japanese consumers. South Korean pork production is growing, but so are imports. A booming pig market in the European Union will put pressure on supplies as prices are rapidly rising. U.S. pork producers are looking for exports to determine prices levels as domestic production is forecast to be four percent higher this year. With all this in mind, Rabobank says the U.S. pork sector is off to a strong start in 2017.
From the National Association of Farm Broadcasting news service.
The Rabobank RaboResearch Food and Agribusiness analysts find the global pork market is relatively stable, with rising supply from the Americas easily absorbed in the main import markets in Asia, resulting in a steady development of the Rabobank Five-Nation Hog Price Index.
Continuing strong Asian imports are supporting pork prices across the globe, with the supply volume in each region determining the actual level. This is according to the Rabobank Global Pork Quarterly Q2.
“The overall outlook is positive right now,” says Justin Sherrard, Global Strategist Animal Protein at Rabobank. “The demand market will continue throughout Q2, supporting margins along the supply chain.”
Highlights from the Pork Quarterly Q2 2017 include:
China: production relocation continues
The steady, regulatory driven relocation of pork production will support good price levels and stabilize imports in the coming months. Local supply will start to recover in Q3, with investments of recent years coming on-stream and reaching their potential.
EU: elevated prices due to pressured supply
The European pig market is booming, with rapidly rising prices due to pressured supply. This situation will continue towards summer, with record piglet prices during Q1. Exports remain the wild card for the market’s price top, with high prices limiting the competitive position and resulting returns.
U.S.: export to determine price level
The forecast 4 percent increase in pork production in 2017 is the driving force in the US pork industry. With consumption moving to record levels, exports will determine the final price level. Current low prices are supportive and also challenge supply from the main export competitor, the EU.
Brazil: limited impact of scandal on exports
Brazil is steadily growing its position in pork export markets, with rising volumes flowing into all main destinations, especially China. The recent meat scandal has had little, if any, impact on export volumes and related prices.
The rise of pork concepts
“Over the last decade, pork production systems have diversified in many countries, with a commodity focus making way for more specialized production.” says Justin Sherrard.
The report provides an analysis of the development of pork concepts and their implications for the supply chain going forward.
Volume and price drivers are changing
The global pork industry was relatively straightforward for many years, i.e. produce as much pork as possible and sell it to the highest bidder globally. Productivity, volume, and price of an increasingly ‘lean’ product were the key variables. This resulted in an interchangeable commodity product and growing competition.
This traditional production approach is, however, changing, in response to some consumers’ concerns around animal welfare, human health, and the environment. In addition, some farmers were not happy with the volume and price ‘squeeze’. Furthermore, food safety scandals increased retail and foodservice demand for improved product tracking & tracing. This is not only observed in the developed world, but—due to social media—also increasingly in the cities in the developing world.
Pork concepts are emerging
These factors resulted in the development of new production systems, or concepts. Concepts differ from traditional production systems and each other, with specific requirements regarding animal health, human health/healthy eating, food safety, medicine use, etc., or are produced for a specific retailer/foodservice supplier. Initiators are farmers looking for a steadier and (hopefully) a higher margin, slaughterhouses safeguarding sales channels, or retailers setting up dedicated supply chains to have 100% tracking & tracing or for specific niches.
A full copy of the report is available upon request.
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