Source: Tom Johnston, MEATINGPLACE, 7/18/16


Continuing strong Chinese import demand and stalling supply will continue to support global pork prices through the third quarter of 2016, according to the Rabobank Global Pork Quarterly Q3 2016 report.

“This will result in a further rise of the Rabobank five-nation hog price index supporting margins across the globe,” said Albert Vernooij, Animal Protein analyst at Rabobank, in a news release. “Wildcards are feed costs and the Brexit-induced changing exchange rates, which could negatively impact the upswing, especially in the EU and the US.”

A regional canvassing of the impacts are as such:
China: Prices expected to peak during Q3
The volatile prices in June are only temporary. With supply forecast to bottom out and demand starting to pick up seasonally, prices are expected to peak somewhere during the coming months, supporting imports that will likely exceed 2 million tonnes in 2016.

EU: bullish market to remain
Chinese import demand and declining supply will continue to support prices and much needed margin recovery. The main challenge for the EU pork industry remains to limit supply expansion, while FX currently supports the EU’s competitive export position but domestic consumption remains lackluster.

US: Export to drive further price recovery
Relative tight supply, positive developing domestic consumption and optimism of increased exports will continue to support positive margins. The expected export growth due to rising EU prices might be limited with the U.S. dollar strengthening in the aftermath of the Brexit vote.

Brazil: Corn prices key for supply
Easing corn prices in the second half of 2016 will relieve part of the cost pressure in the Brazilian pork industry. Combined with increasing exports and higher pork prices, this will support margin recovery. However, this will not be sufficient to induce production expansion.

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