Rabobank: Prospects for Pork Bright in Q1 of 2012

by 5m Editor
3 February 2012, at 8:40am

GLOBAL - Prospects for the pork industry appears bright during the beginning months of 2012. Many segments of the pork industry returned to profitability in 2011 and as a result, stronger margins are expected this year.

According to Rabobank's report for the first quarter of 2012, it is expected that during the first part of the quarter, high pork prices and disease problems in some countries will slow down production growth. However, this may prove to be a boon to producers and processors as they await margin recovery in 2012. Pork prices are also expected to recover strongly.

In China, imports are forecast to be slow but strong. In 2011, the country's pork and variety meat imports rose by 80 per cent, leading to surge in prices on a global level. Rabobank expects China to be the driving force in future prices. It is likely that pork imports will drop by about 18 per cent. According to Rabobank, a key indicator will be if China imports pork in February after the New Year celebrations.

FMD and African swine fever outbreaks in China and Russia respectively will continue to influence the global pork market in 2012. Russia's ASF situation has worsened as it continues to spread to various regions.

In 2012, Europe is regarded as a wild card for pork outlook. Exports are expected to remain strong, which will ultimately lead to a tightening of the EU's domestic supply. This will most probably support the pork industry in early 2012.

As stable feed prices and strong pork prices make room for margin expansion, Rabobank expects that the pork industry will continue to grow based on recent gains. Several industries, particularly in the US and EU, will be provided an opportunity to continue to rebuild balance sheets. A major factor that will determine long-term profitability will be a well-maintained demand/supply balance and ultimately, this will position the industry for future volatility.

Further Reading

- You can view the Rabobank Pork Quarterly report by clicking here.