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EU market review sees a glimmer of hope in fats, but not much else

PW ReportersBy PW ReportersOctober 21, 20142 Mins Read
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It would be “no surprise” to see a resumption of the downward trend in the EU breeding herd next year, according to a detailed review by BPEX of the challenges currently facing EU pig producers.

“Overall, it is quite likely that global export demand will be lower next year, while exportable supplies could be higher if PEDv has less impact,” said BPEX. “This could make the challenging conditions on the EU market even more difficult. All in all, any optimism which EU pig producers had a year ago is likely to have dissipated.”

This conclusion comes on the back of a review of 2013/2014, which began with EU pig producers expecting a positive year, only to be hit by the confirmation of African Swine Fever (ASF) in Poland and the Baltic States and the subsequent Russian ban on imports of pork products from the whole of the EU.  Even though prices initially bounced back from that, the second Russia ban in August “meant that the prospect of being able to clear stocks from freezers and chillers within the next few months disappeared”.

“At the same time,” said BPEX, “the global impact of PEDv was beginning to wane, leaving the market on a knife edge.”

Looking forward now, therefore, the organisation’s brightest comments relate to the “glimmer of hope” that surrounds the fats (e.g. lard) sector.  This is one of the main product groups which was previously exported to Russia and is not included in the Ukraine-related ban, but was covered by the earlier ASF ban.

“With the EU its dominant supplier and others unable to fill the gap, Russia is short of fats,” said BPEX.  “Although it doesn’t seem likely at the moment, there is therefore a chance that Russia could be encouraged to reopen its market to some EU fat suppliers before next summer. This would add value to the EU market and give some support to prices.”

Overall though, the BPEX message is brutally realistic about the challenges to be faced in 2015.

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