Global Pork Market Weakens in First Quarter (VIDEO)

February 2, 2016 03:15 PM

The global pork market will remain weak through the rest of the first quarter, followed by a slight improvement leading into Q2, according to Rabobank’s Global Pork Quarterly Q1 report.

 “Sufficient supply and modest demand development mean the Rabobank five-nation hog price index will bottom out in the coming months, at the lowest point since 2006,” analysts said in the report. This comes after what the bank said was a stronger-than-expected drop at the end of 2015, according to its Global Pork Quarterly Q1 report.

Here are some of the key highlights:

1. Expect China’s imports to grow. China’s pork imports are expected to further increase, so that market will remain elevated, said Rabobank. This upturn is “supported by strong domestic prices and further destocking of the herd in 2016, driven by stricter environmental regulations. The level of China’s imports and relative competitiveness of major exporters is a major dynamic in 2016.”

2. U.S. pork exports will influence prices. The U.S. pork industry went through significant expansion in 2015, but with lower pork prices, it is expected to be slower this year. Slaughter capacity is being stretched, according to the report, which says that “packers’ margins will remain strong due to limited available capacity.” On a positive note, the repeal of mandatory country-of-origin labeling (COOL), low U.S. pork prices, and relisting of plants for export to China are encouraging indicators for U.S. producers, despite a strong dollar.

3. Ongoing recovery of the E.U.’s pork market will depend on private storage. Rabobank reported that the European pork-market recovery during the first weeks of 2016 will reverse in the coming weeks, after the suspension of the European Commission’s Private Storage scheme. The measure provided EU funding to help cover the costs of storing certain pigmeat products for periods of 3 to 5 months. “Reopening of the scheme will be critical for further market support,” according to the report. 

Watch the AgDay segment here:

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