World pork market shows steady production growth, weak consumption

Steady gains in production in combination with weaker consumption continue to pressure global pork markets and trade. That is a brief summary of the latest quarterly pork report by Rabobank. All in all, the bank stated, lower feed costs, better animal health and improved productivity bolster industry optimism despite challenging returns and uncertain consumption trends. After productivity challenges in 2022 and 2023, several key growing regions appear to be turning a corner, the bank wrote. While disease pressure is still an issue in some regions, overall herd health has improved. In a news release, the bank’s senior animal protein analyst Christine McCracken said: “A renewed focus on cost reduction – given inflationary pressures resulting in the elimination of less productive operations – is also contributing to a rebound in production per sow. Although this improvement is a welcome trend and lowers costs, the additional production is compounding regional oversupplies and weighing on the market.” At the same time, breeding herd reductions in most geographies outside Europe and South Korea are slow, despite ongoing margin pressure and limited optimism for a quick turnaround in global trade, the bank said. Corn and soybean prices moved lower in the third quarter of 2023, after a good North American harvest helped rebuild stocks and expectations for a large South American crop emerged, the bank wrote. Consumers are adjusting to inflationary pressures, yet pork remains a dietary staple and overall consumption trends remain stable. However, pack types and sales channels continue to shift. McCracken concluded, “In the final quarter of 2023, we expect global trade to remain slow given large inventories, relatively high domestic production, and low pork prices in key importing regions. Rising EU pork prices may also limit export volumes.” In Europe, pork production in the 27 EU countries and the UK contracted sharply, Rabobank reported. In the first 7 months of 2023, this would come down to 8.6% year-on-year. In Germany, the sow herd had contracted by 2% in June 2023 when compared to December 2022. One year earlier, the contraction had been 12% in the same period. Contraction in the sow herd will slow down, the bank expects, due to improved producer margins. Exports remain weak on relatively high prices and weaker global economies.