The impact of the Russian ban on the global pork trade could be felt more next year than this, potentially driving prices back towards $3 (£1.83) per kg, and perhaps even lower, according to BPEX.
While generally accepting that the global pork trade has weathered the turbulence of the last few months pretty well, responding to disease, restrictions relating to feed additives and international geopolitics, with an increase in international trade and better prices, BPEX sees the future containing the threat of an oversupplied global market, followed by the risk of a return to falling prices.
The first part of the picture looks positive enough, leading to a fairly rapid realignment of the global market in response to the latest Russian ban.
“With the EU already banned from Russia and US shipments at a low level, the latest (Russian) ban will mainly impact on Canada and Brazil,” said BPEX. “Canadian pork will need to find a new home but there should be opportunities in the US and Mexico, where PEDv means supplies are tight. Demand from Asian markets tends to be higher in the second half of the year so, with the US short of supplies and Brazil focusing on Russia, both Canada and the EU should be able to find markets there for their exports. There will be increased demand for Brazilian pork from Russia but Brazil will struggle to match its requirement.
“Russia is therefore looking to other potential suppliers, notably China, which could leave gaps for other exporters on the Chinese market. Overall, while there may be some short-term disruption, global trade should realign fairly quickly.”
Moving forward into 2015 doesn’t look quite so positive, however.
“The impact of the Russian ban could be felt more as we move into next year and global supply levels increase as the impact of PEDv wanes,” said BPEX. “Unless demand picks up, there could be some oversupply on the global market, driving prices back towards $3 (£1.83) per kg and perhaps even lower.
“Demand from Asia may remain robust, especially if lower Chinese production stimulates import demand. However, this could be insufficient to match available supplies, if demand doesn’t improve elsewhere. Even if Russia’s market does re-open next summer, its requirements are likely to be lower than before as its production expands rapidly.
“All in all, the turbulence in the global trade looks to be far from over.”