Summary

Broiler Meat: Exports are forecast moderately higher. Both the United States and Brazil have ample supplies and market access to satisfy rising imports by Russia, the Middle East and a number of markets in Asia. The strongest import growth is expected in Russia where the United States, its leading supplier, is expected to fill the tariff rate quota.

Beef: Exports are forecast to rise, reversing the trend of recent years. Production expansion by South America and India is expected to more than offset declines in North America and Oceania. However, growth in world trade continues to be constrained by tight supplies and Sanitary/Phytosanitary (SPS) restrictions. Imports in a number of countries are forecast higher as domestic supplies are tight. Also, continued economic recovery is expected to bolster Asian imports.

Pork: Exports are forecast just short of the record set in 2008. More competitive US and Brazilian pork is expected to displace EU shipments, where rising costs of production result in lower exportable supplies. Global demand is expected to be slightly stronger with contracting Canadian production offset by larger imports and improving economic conditions stimulate Asian demand.

PORK AND SWINE: 2011 FORECAST OVERVIEW

Slight Growth in World Pork Production, Likely Tempered by Higher Feed Costs

World pork production is forecast to rise about two per cent to 103.4 million tons with China accounting for 80 per cent of the increase. Modest production gains are also expected in the United States and Brazil, as higher feed prices are expected to temper growth throughout the world.

China: Production is forecast to grow by thee per cent to a record 51.5 million tons. The vast majority of the growth is expected to come from large-scale operations, supported by government subsidies. Production in the first part of the year will likely be weaker than during the same period in 2010, as ongoing disease problems and the end of government sow subsidies are expected to result in lower sow stocks at the beginning of the year. Production is expected to pick up later in the year, but could be tempered by higher feed costs.

United States: Production is forecast up nearly two per cent to 10.2 million tons as high feed prices are expected to keep the growth in sow farrowing modest and dampen hog weights. However, strong demand for swine will likely result in a three per cent growth in imports from Canada.

Brazil: Production is forecast up three per cent to about 3.3 million tons, bolstered by strong domestic demand as pork prices are expected to remain competitive with beef. Although concerns remain about credit and the value of the Brazilian real, export optimism is helping support production plans.

EU: Production is virtually flat at 22.1 million tons as a result of rising feed and investment costs. Greater competition on the world pork market and easing domestic demand is forecast to pressure carcass and piglet prices. A large percentage of pig farms do not yet comply with the EU environmental and animal welfare requirements that will enter into force in 2013, likely raising sectoral costs.

Canada: Production is forecast two per cent lower at 1.7 million tons, as the downsizing of the Canadian industry continues. After a number of years of continued decline in swine inventories, pig production will remain at low levels. This will translate into lower meat production and a potentially tight market as domestic demand picks up. Nonetheless, given lower production, per capita consumption is expected to continue its five-year downward trend. However, producers are expected to have a difficult time taking advantage of higher pig prices and tight supplies due in part to limited financing for expansion and increasingly stringent environmental regulations. Additionally, higher feed costs could result in lower slaughter weights, potentially further reducing Canadian pork production.

World Pork Exports Flat as EU Loses Export Share to the United States and Brazil

The world export forecast is virtually flat, although significant shifts are expected to take place between major suppliers.

EU: Exports are forecast to drop nine per cent to 1.6 million tons as a result of increased competition, particularly from the United States and Brazil. In addition, domestic supplies are expected to fall due to shrinking margins from higher feed prices and EU legislation that requires additional investment.

United States: Exports are forecast five per cent higher at 2.1 million tons, with market share expanding in Asian markets (Japan, Hong Kong and South Korea) and greater Canadian imports. Mexico is expected to continue growing in importance, although at a slower rate than before.

China: Exports are forecast higher due to stronger demand from traditional markets, Hong Kong, Japan and Kyrgyzstan. Cooked pork products typically account for nearly half of the exports to those markets.

Brazil: Exports are expected to rebound slightly on stronger demand from Brazil’s major markets. While strategically focusing on new markets in Asia, such as China, the government has begun to advocate for access to the United States and Mexico.

Although the state of Santa Catarina, Brazil’s largest pork-producing state, has been recognised as free of Foot and Mouth Disease (FMD), pork processors have not yet been approved for export to the United States.

Modest Import Growth as Strong Global Demand Meets Limited Supplies

Imports are forecast higher based on significantly higher purchases by key North American and Asian markets, as well as modest growth in virtually all other markets.

Canada: Imports are forecast to rise 15 per cent to 230,000 tons on lower domestic production and greater consumer demand following the recession.

South Korea: Imports are forecast eight per cent higher to 410,000 tons in response to rising consumer demand. Improving economic conditions are expected to result in greater restaurant consumption, where imported pork is widely used. Greater imports paired with larger domestic production is expected to result in nearly one-third of a kilogram increase in per-capita pork consumption.

China: Imports are forecast up six per cent, yet will account for only one per cent of consumption and remain below the 2008 record.

United States: Imports are expected to be three per cent higher on tight supplies and stronger domestic demand.

Further Reading

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October 2010