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AHDB European Market Survey


07 May 2012

AHDB European Market Survey - 4 May 2012AHDB European Market Survey - 4 May 2012

In its latest forecasts for the global livestock and poultry markets, USDA estimates a two per cent rise in meat production during 2012.

AHDB

Global meat production forecast to grow during 2012

In its latest forecasts for the global livestock and poultry markets, USDA estimates a two per cent rise in meat production during 2012. This is led by a three per cent growth in production of pig meat, with poultry meat forecast to be up by two per cent. Beef and veal production is also forecast to increase, albeit only marginally.

USDA forecasts that global pig meat production in 2012 will total 104 million tonnes, 2.6 million tonnes higher than in 2011. This is largely due to a recovery of production in China and South Korea. In China, production is forecast to rise by four per cent to 51.6 million tonnes as milder weather conditions mean that there have been fewer disease outbreaks and better profitability has encouraged expansion. In Korea, production is projected to grow by 17 per cent as the industry recovers from the FMD outbreak which began in late 2010. However, this is still 12 per cent below its 2010 level. Elsewhere, production in Russia is expected to increase by five per cent due to expansion of modern, large-scale operations aided by government support. Most other major producing countries are expected to record little change in production between 2011 and 2012.

Global production of beef and veal is forecast to total 57 million tonnes in 2012. This represents a marginal increase compared with estimated production during 2011. Brazil, is expected to increase production by around two per cent to 9.2 million tonnes. Otherwise, the only major producer expected to increase production significantly is India, forecast to rise by 11 per cent to 3.5 million tonnes. This is all made up of buffalo meat since slaughter of cattle is not permitted in India. The increase is the result of an expanding dairy herd, increased slaughter and price competitiveness in the global market, with nearly half of production destined for export. As a result, India is projected to become the world’s largest exporter of beef in 2012. Balancing this increase, production in the US, the largest beef producer, is forecast to fall by four per cent to 11.5 million tonnes, largely as a result of lower cattle numbers due to drought conditions during 2011.

Poultry meat production is forecast to rise by two per cent to 87 million tonnes. Broiler meat makes up 94 per cent of this and most major producing countries are expected to increase production during 2012. The main exception is the US where high feed costs are limiting any expansion plans and high meat prices are set to reduce domestic consumption. Again, India is among the fastest growing producers, forecast to rise by 10 per cent as greater vertical integration and increasing demand from an expanding middle class support increased production.

Growth in China and Hong Kong pork imports

Chinese pork imports more than doubled in the first three months of 2012, compared with the same period of 2011, to reach 147,000 tonnes. Trade with the largest supplying nation, the US, was up by 150 per cent on the year. In addition, there was strong growth in shipments from Spain and Germany up 215 per cent and 580 per cent respectively. The average price of imports was up 56 per cent in US dollar terms partly due to a greater proportion of imports consisting of more expensive hams and shoulders and a firmer domestic market than a year earlier.



Chinese pork production was forecast by the USDA in late February to increase by four per cent in 2012. Fewer disease outbreaks in late 2011 combined with Chinese policies to encourage domestic suppliers to increase their inventories (see EMS 12/06). Therefore, despite the growth recorded in the first quarter, imports were forecast to fall for the year as a whole. In 2011, China made larger than normal purchases as disease problems constrained domestic supplies, leading to the government making large purchases from foreign sources to mitigate price rises.

Offal imports were also up on the previous year in the first quarter of 2012 but by only four per cent. Shipments from the largest supplying nation, the US, were down one per cent. In contrast, imports from the EU were up 29 per cent as some exporting countries exploited the increased potential for offal on the Chinese market. The average unit price of offal imports increased 31 per cent on the year in US dollar terms.

Hong Kong’s pork imports were up 27 per cent in the first quarter of 2012 compared with the previous year. The average unit price of pork imports was up 21 per cent in US dollars. Shipments from Brazil, Germany and the US were up 79, 50 and 73 per cent respectively. Brazil has identified Hong Kong as a market for growth to reduce its dependence on Russia. In contrast, there were 29 per cent less imports from China. There was also strong growth in shipments from the smaller supplying nations of Denmark, Spain and the UK.

Shipments of offal into Hong Kong fell by 15 per cent on the year. Despite the overall fall in volumes, imports from Germany and Brazil were up 17 and nine per cent. The unit price of offal imports rose 32 per cent on the year in US dollar terms.

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