Source: MEATINGPLACE, 10/21/16

 A glut of U.S. pork at a time when Chinese imports are slowing will pressure global pork prices in the months ahead, Rabobank said in its latest quarterly pork report.

“Prospects for 2017 are weak, with global trade expected to stabilize and all main producers in expansion mode, making supply discipline key to the outlook," Rabobank animal protein analyst Albert Vernooij said.

In China, prices are expected to rebound until the Chinese New Year due to low production and seasonal demand. This will continue to support import volumes, but growth will be slower than previous months, Rabobank said. Competition also will intensify as more countries and companies obtain export permits.

Higher-than-expected U.S. supplies, combined with stalling exports and rising domestic competition from beef and poultry, are pushing hog prices and industry profitability down, Rabobank said.

For U.S. hog producers, the situation will worsen in the fourth quarter, with slaughter capacity constraints putting processors in the driving seat until new capacity arrives in 2017.

In the European Union, herd expansion will need to stop to support prices, because rising competition the declining British pound are pressuring returns in the Asia market, the bank said.

Brazil is set for a recovery in pork prices in the fourth quarter, supported by balanced supply and rising exports. Combined with an expected decline in feed costs, this will support production and exports in 2017, Rabobank predicted.

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