Rabobank: Positive Outlook for Global Pork Output

GLOBAL - Rabobank has published a new report on the global pork industry, forecasting an improved market, but later and with lower prices than had been previously expected. The report also provides an outlook on issues of supply, demand and pricing for global as well as regional markets.
calendar icon 25 July 2013
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In the report, published by the bank’s Food & Agribusiness Research and Advisory team, the bank says it expects a positive landscape for the pork industry in the second half of 2013 and into 2014, with limited supply growth, a likely increase in demand in China towards the festival season, and continuing high beef and poultry prices. However, the bank predicts that price increases will be limited due to high stock levels resulting from the disappointing first half of 2013 across the globe, and due to the continuing effect on demand of the economic crisis, mainly in the developed world.

"With declining feed costs resulting from bumper harvests, a subdued price increase will support a much needed margin recovery across the globe," explained the report’s author, Rabobank analyst Albert Vernooij. "However, due to both the slow increase of pig prices and slow decline of feed costs, it is questionable whether this will be enough to fully cover losses endured in the first half of 2013."

Rabobank’s Five-Nation Hog Price Index Improved

The Rabobank five-nation finished hog price index rebounded in the latter half of the second quarter of 2013, supported by improving conditions across the globe with limited impact of exchange rates. In the European Union, the situation is forecast to remain difficult, with continuing pressure on consumer demand hampering market recovery, despite lower supply and rising exports. However, prices recovered in China, supported by the outbreak of H7N9 avian influenza in poultry, which resulted in a consumer move to pork. In the United States, prices have also recovered following the loss of key export markets, due to an increase in seasonal demand and lower-than-expected supplies.

Outlook for H2 2013

The expectations for the second half of 2013 are largely dependent on the prospects for demand, as production is forecast to slightly increase. Pork markets are benefiting from relatively high prices for both beef and poultry, but will be negatively influenced by the continuing difficult economic conditions in key markets. Rabobank expects a slight increase in overall global pork consumption in the second half of 2013, due in part to the start of the festival season in China. This will support rising prices, but will likely be limited due to the current large stocks across the globe.

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