2023: a year of caution in pork industry

Softer consumption trends in early 2023 are prompting caution in the global pork industry as it struggles to adjust to a moving target, according to Rabobank’s latest quarterly pork report. Weaker economic growth is starting to have an impact on global pork consumption. Although the worst of the inflationary effects appear to be in the past, the lagged impact on consumption is likely to be felt throughout 2023. In a slowing economy, pork remains well-positioned, as demand for the protein is historically less income-sensitive than more expensive proteins like beef and premium seafood. “Nevertheless, we see persistently high retail prices limiting consumption of all proteins. Consumers continue to conserve capital by shifting everyday purchases to lower-value protein options, switching channels, and moving to smaller pack sizes,” says Christine McCracken, senior analyst – animal protein at Rabobank. Moreover, industry optimism in 2022 after a notable upward shift in pork consumption (and prices) in some markets and expectations of a 2023 recovery of pandemic-restricted consumption in others contributed to planned supply growth in 2023. That growth will take time to curb. “Slowing supply in Europe will help balance the industry, yet high costs of production and limited consumer support will require a more conservative approach to production to stabilize margins,” McCracken said. Although a modest improvement in production costs is expected in 2023, local conditions will vary, and risk management will remain critical to success. Global feed stocks are at historically low levels, and availability remains tight. A disappointing Argentine harvest will partially offset Brazil’s record 2023 soybean and safrinha corn crops, leaving the market to focus on import needs, Black Sea grain availability, and the successful planting of a new crop in the Northern Hemisphere. “Rabobank expects the small global cushion in grain and oilseed stocks to drive additional feed cost volatility in 2023,” McCracken said.