Rabobank report
Battle for Chinese pig market continues
Chinese pork imports have slowed somewhat lately, but are expected to pick up again in the rest of the year. As a result, the battle for the Chinese pig market will continue, Rabobank said in a report on the pig market.
Rabobank predicts that the global pork supply will increase further in the first quarter of 2018. This is mainly powered by the United States (US), Canada and Brazil. “Due to the slowdown in imports from China, there is a chance that there will be an oversupply in the global market,” said Chenjun Pan, RaboResearch Senior Analyst Animal Protein. “However, we expect imports to pick up somewhat in the rest of the year, leading the European Union (EU), US and Canada to continue their battle for the Chinese pork market in 2018.”
Pork prices in China were stable due to tight supply. This is a result of stricter environmental regulations in 2017, which resulted in a lower capacity. Despite the fact that imports are currently showing lower figures, Rabobank expects production to continue to rise in 2018. “Expansion in production means that exports will become more important in 2018, so we expect competition to increase in key import markets,” said Justin Sherrard, RaboResearch Global Strategist.
Europe: supply pressures the market
Rabobank expects European production to enter the market from 2018. This after a short period of strong profitability, as a result of which pig producers have invested in growth. The extra supply is expected to push prices down. Rabobank mentions that this could subsequently stimulate pork consumption and export, especially to Asian countries (China has a key role in this).
US: Competition intensified
Rapid US pork production growth (+4,3%) will necessitate free flow of exports and healthy domestic demand. Strong exports have intensified competition in the country. This offers producers an opportunity to achieve very good margins for much of 2018, according to Rabobank's report.
Brazil: local demand for meat
Rabobank also expects local demand for pork in Brazil to increase. This is also related to the improved economic conditions. The expected stabilization of feed costs will support profitability for much of 2018. In addition, the bank expects pork exports to China to pick up sharply in 2018.
Kimberly Baker
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