Producers warned of rising pressure on meat prices and margins

While global meat consumption continues to rise, a supply-driven and more competitive market will create challenges for producers in 2017, putting pressure on prices and margins, according to a new report published today by Rabobank.

Forecasting that China will continue to exert a huge influence on global meat markets next year, the bank says that pork imports by China, which rose to record levels in 2016, will remain constant next year while the country’s beef and poultry imports are expected to rise.

In the US, meanwhile, production is expected to continue growing, albeit with a warning that consumers’ appetites are being tested as record levels are reached. In that context, the report also states that the strong dollar and uncertainty over future trading relationships with China and Mexico create potential headwinds for American producers. The US, of course, is currently the world’s largest exporter of pork to China, excluding the EU.

“In a market driven by supply, we expect prices to come under pressure next year,” said Rabobank’s global strategist for animal protein, Justin Sherrard (pictured above). “That will be a boon for consumers but a clear challenge for producers and processors.

“With rising demand, we forecast that China will maintain its 2016 record levels of pork imports next year and could increasingly seek something akin to ‘imports-plus’, locking in supply as it targets food safety and security for its growing population.

“Meanwhile, US producers head into 2017 grappling with the potential of changes to the country’s trade policy and further currency movements. Indeed, with worldwide currency fluctuations depending on political machinations as well as central bank decisions, we are becoming accustomed to expecting the unexpected.”

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