Meat & Livestock News

Pork Sector Demonstrates Resilience Amid Economic Hurdles, Rabobank Report Indicates

Cutting meat in slaughterhouse .

The global pork market is holding its ground despite a series of challenges in recent years, as detailed in Rabobank’s most recent quarterly review. The report singles out enhanced herd well-being and a commitment to cost-cutting as pivotal elements in the sector’s rebound.

Herd Well-being and Cost Efficiency

Christine McCracken, Rabobank’s lead analyst for animal protein, pointed out that a renewed focus on cost-efficiency has led to the phasing out of less efficient operations.

This has subsequently resulted in an uptick in production per sow. “While this extra production is causing a glut in some regional markets, the overarching trend is encouraging,” McCracken observed.

Animal health remains a concern, but the report suggests that the general health of herds has markedly improved. Excluding Europe and South Korea, reductions in breeding herds have been gradual, likely due to a positive outlook on pricing and reduced rearing expenses.

Economic Variables and Feed Costs

The economic dimensions affecting the sector were also discussed in the report. Prices for corn and soybeans have seen a 20% to 30% decline year-on-year, following abundant harvests in North America and anticipated large yields in South America.

Nonetheless, McCracken warned that other operational costs, such as labour and insurance, continue to burden most producers.

“The onset of El Niño weather conditions could potentially influence the South American growing season,” added McCracken.

Consumer Behaviour and International Trade

In terms of consumer behaviour, pork remains a mainstay in diets, and the industry is adjusting to evolving consumer spending habits in the face of inflation.

“Given the current geopolitical instability, consumers are becoming increasingly prudent in their expenditure,” McCracken stated. Despite these headwinds, Rabobank anticipates stable pork consumption through 2024.

Global pork trade has been sluggish, impacted by lacklustre holiday demand and fluctuating currencies.

Trade volumes declined in August for China, South Korea, and the United States, while only Canada and the UK saw increases. “We foresee this pattern persisting into the fourth quarter of 2023 due to ample stock and elevated domestic production in key import regions,” noted McCracken.

Performance Metrics in the US and China

In the United States, the value of pork exports dipped by 1.5% in August, although volumes remained stable at 226,519 tonnes.

Rabobank predicts that US exports will maintain this level for the remainder of the year, despite the challenges posed by growing frozen stockpiles and softer demand in certain markets.

In China, the price of hogs has fallen by 8% over the past six weeks. Despite this downturn, Rabobank maintains a positive outlook, expecting seasonal demand and increased consumption to support China’s pork markets in the months ahead.

The report emphasises the sector’s need for continued vigilance and flexibility in navigating ongoing economic and geopolitical complexities.