Price pressures on EU pigmeat will “likely” continue says Rabobank

The Russian trade ban will increasingly weigh on the pigmeat market, moving into 2015, especially in the EU, according to the latest pork quarterly report from Rabobank.

Acknowledging that the EU pork market has already been “severely affected” by the ban in Q3 2014, the report’s authors see little hope of an improvement, at least not in the short term.

“There has been some realignment of EU pigmeat exports since the first Russia ban was introduced early in 2014,” Rabobank analyst, Albert Vernooij, told Pig World.  “About a quarter of EU pigmeat exports went to Russia in 2013, while the total decline in EU export numbers in 2014 is running just below 10%.

“That means, the EU has been able to export the other 15% to others markets, mainly Japan and South Korea.  Unfortunately, we can’t find new markets for everything that is available, especially as we are still quite expensive on exchange rates, a factor which is not helping.”

Asked about the various “unknowns” which could still alter the pigmeat picture going forward, Mr Vernooij said it was impossible to comment on, or assess, whether or not the Russian market would stay closed until July 2015, or how much help the European Commission would give to the pigmeat sector.  Both issues were “all about politics” and very much beyond speculation.

The other unknown was porcine epidemic diarrhoea virus (PEDv).

“Whether or not PEDv will return and, if it does, how strong its effects will be, are big questions in the US, Japan, Korea and some other countries,” said the report. “With vaccines coming to the market, although most have yet to be proven effective, and knowledge of the virus increasing, Rabobank expects the impact to be limited.”

That led to the conclusion that with the EU currently operating at higher production levels, induced by lower feed costs, and the increased impact of the Russian ban, the pressure on prices for the sector will “likely continue”.

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