Pork prices set to hit record next year, predicts Rabobank
The Rabobank Pork Quarterly Q4 Report pointed out that the global pork sector has experienced “one of its most turbulent years in history”, with high feed costs driving the liquidation of pig herds across the world. It predicted that the pressure on pork prices resulting from this herd liquidation would continue for the first part of Q4, but that prices would start to climb again at the end of the year and into 2013.
Key to the volatility of the market has been “contrasting price developments between pork-producing regions”, the report stated. Pig prices in North America and South Korea have dropped as a result of a seasonal supply boost and the beginning of herd liquidation, while prices in Brazil and the EU have strengthened as a consequence of supply restrictions following herd liquidation earlier in the year.
The report pointed out that the EU sow population is down 3.9% this year, with analysts blaming poor profitability and the incoming ban on sow gestation crates for “heavy herd liquidation” on the continent. Strong export demand as a result of low currency values was also identified as a driver for strong pig prices in Brazil and the EU.
China is unlikely to increase pork imports dramatically in the short term, with supplies boosted by recent herd expansion and a relatively disease-free environment. However, the report said the country remained a “wild card” and predicted that fluctuating Chinese imports would be a key factor driving the market in the years ahead.
Looking to 2013, the report said the impact of the global economic crisis on global demand would be a key “unknown” factor affecting prices, with the impact of disease outbreaks, such as African Swine Fever in Russia, also playing a role. It predicted that tight supplies and a challenging economy would result in record pork prices next year, with some cuts seeing “very big increases”.
