Rabobank: global pork production is growing slowly with rising prices The Dutch Rabobank forecasts a slowly increasing global pork production for the year 2021. The pace of growth is slowed by rising costs, especially for feed, losses due to diseases and uncertainties in the development of demand. In the world's largest production area, China , the recovery of the ASP-related decline in production is only progressing slowly. Recurring outbreaks of disease and high feed prices, converted between 35 to 45 € / dt, slow down the replenishment activities. The number of sows in the course of 2021 will only slightly exceed the previous year's level. The high forecasts from previous months are not achieved. On the other hand, declining demand ensures relaxation. The pork deficit in China will remain high for the time being. However, the necessary import quantities are estimated to be less than 6 million t. In the 1stIn the first half of 2021, Chinese pork prices fell from over € 5 / kg to just over € 3 / kg. A decline in demand, high import volumes of inexpensive meat and the improved domestic supply all work together. The forward prices on the Dalian stock exchange point to rising prices again for autumn 2021, but remain below the € 3.5 / kg line. In the second largest production area in the EU , contradicting developments partially cancel each other out. Strong production expansions in Spain, Denmark and the Netherlands are largely offset by declining pig populations in Germany and Italy. Despite the ASP trade ban for Germany, third country exports are at a high level. For the summer and autumn months, if the corona restrictions are relaxed, an increase in demand is expected again. Possible EU production increases in the second half of the year will remain within the seasonal framework.The EU pig prices have recovered after their low at the turn of the year and are developing on a medium-term average line. However, the increased feed costs prevent sufficiently high profits. In the USA, the third largest production area , low stocks, fallen slaughter numbers and slaughter weights mean that supply is scarce. On the demand side, consumption increases, especially in the summer barbecue season. Pig prices have doubled within the first half of 2021. The high exports of the previous year can only be maintained with great difficulty. Business in China in particular is declining. For the delivery month July 2021 , pig prices equivalent to € 2.17 / kg are traded on the Chicago Stock Exchange. However, this price level should fall back to € 1.57 / kg by Dec 21. The price trend in Canada was similar to that in the USA.However, the increase in production over the past two years has come to a standstill. The export share also remains constant at around two thirds of production. The most important countries of destination are the USA and Japan with a combined trade share of over 60%. In Brazil , high prices in the spring months created a euphoric mood. The trigger was the booming China export business. But recently, the weak domestic demand due to economically induced lower incomes has determined the price situation. The quotations have plummeted by around 30%. The growth in Brazilian production is also being hampered by a doubling in feed prices. The forecast production increase of 4% will no longer be achieved. Despite an internationally networked trade exchange, the respective conditions in each individual production area leave their mark on what is happening in the market.This is largely due to the dominant fresh meat business in the value-adding cuts in the pork sector, which does not reward storage and transport over long distances. There are also various types of trade barriers and protective tariffs.
