The Dutch bank expects the global pork market to soften to more normal levels in the second quarter of 2012, with reduced Asian imports and the success of the grilling season in the northern hemisphere named as main factors determining the health of the sector.
Once again, Rabobank believes supply discipline in the key export markets will be essential to support price levels, and warned that growth in meat consumption will continue to lag behind income and population growth in emerging markets, creating volume and price risks all along the supply chain.
March price levels were 4.3% lower than in December 2011, and 14.3% lower then the latest peak in July 2011, a drop attributed to the recovery in Chinese hog production and the consequent drop in imports from Asia.
“The global pork market is returning to a more ‘normal’ situation now that the disease-related Asian import surge is fading. This is mainly impacting the USA, where the buoyant export growth experienced in 2011 has stopped, which reflects the declining pork prices in China.
“Remarkably, exports from the European Union continued to perform strongly with an increase of 17% in January-February 2012 compared with January-February 2011 and just a slight decline (-1.5%) compared with November-December 2011, but here also some pressure can be expected in the coming months,” the report said.
Rabobank also pointed out trade disruption affecting the global industry, such as the Russian ban on Brazilian pork that led to lower pork prices in Brazil, and the protests against ractopamine residue in US pork exported to Taiwan, which “has resulted in a large decline in demand and has put prices under pressure”.