Pork trade future dominated by China and US

Pork import demand in China and the level of pigmeat supplies available in the US are the two main points of challenge for the global pigmeat market according to the latest pork quarterly report from Rabobank.

“Stalling supply and strong import demand in China will support the recovery of the global pork market above the expected seasonal improvement in Q2 2016,” said Rabobank animal protein analyst, Albert Vernooij. “This will result in a higher-than-expected recovery of the Rabobank five-nation pig price index, which will support pressured prices across the globe and will be particularly welcome in the EU.”

Commenting that prices in China are forecast to increase further, on top of current high levels, he added that this would support further imports, which will be likely to rise by more than 50% year-on-year. Supply recovery in China, meanwhile, isn’t expected before 2017, as new regulations curb herd expansion.

Turning to the EU market, Mr Vernooij (pictured above) said the bright spots remained “limited”.

“Real recovery of the EU market will not commence before the still-ample available supply, including EU Private Storage Scheme volumes, is pushed through,” he said, adding that new measures by the European Commission are not expected to result in any structural change to the industry’s competitiveness.

On the US he said that modest herd development and low feed prices support a positive outlook for the country’s pork industry with the main “wild card” being the final price level at which trade operates. That might be hampered, he added, by the ongoing strength of the US dollar and the availability of “sufficient” supplies from other exporters.

Finally, on Brazil, he commented that the ongoing depreciation of the real is supporting both rising pork and corn exports.

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