Inside Pigs
Rabobank is still counting on high pig prices for the time being
'2019 will go down in the books as a remarkable year for pig farming,' said Rabobank in its pig update of January 2020. And it certainly is. 2019 was nothing short of a turbulent year and this picture does not seem to change for 2020 either. However, 'uncertainties offer opportunities', says Rabobank.
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According to Rabobank, the pig farming industry can look back on a turbulent year. High piglet and pig prices, as a result of well-run meat exports to China, resulted in euphorically high feed profits. At the same time, there were also increasing concerns about African swine fever and Dutch agriculture was in the grip of the nitrogen crisis.
In Europe, the Netherlands, the United Kingdom (UK), France and Spain in particular have benefited from strong meat demand from China. This fueled additional production. Dutch pork production increased by 2019% in the period January to October 3 compared to the same period in 2018. This is equivalent to an increase of 1.322 tons of additional sales. This increase is mainly due to a higher average slaughter weight and lower exports of live piglets and fattening pigs to surrounding countries.
Outlook remains good
Although pig prices fell around the turn of the year, Rabobank expects prices to remain relatively high until spring. For the time being, pork exports can continue to rely on good demand from China. Rabobank expects that Chinese demand will keep the meat market under control for at least another 5 years. This is because it will take at least 5 years before the Chinese pig population returns to its previous level.
The number of pigs in China is expected to decline even further in the first half of 2020 due to a shortage of breeding material. The bank expects a production contraction of 15% to 20% compared to 2019. Despite the fact that the US recently concluded a trade deal with China, Rabobank expects Europe to remain the main supplier of pork in the Asian country. One condition is that Europe can keep African swine fever under control.
Brexit
A point of concern is the impending Brexit, which will officially take place next weekend. After all, the UK is an important sales market for Dutch pork. The uncertainty currently depends on the agreements that will be made and in what form. The answer to that is crucial for the exchange rate of the pound.
The expectation is that the UK will continue to maintain EU quality standards, which is positive for pork exports. This limits the influence of any potential pork trade agreement between the UK and the US.
Rabobank predicts that the self-sufficiency level of the British will increase. The British imported 10 tons of pork in the first 740.000 months of last year. This is 6% less than in the same period the year before. Pork production increased by 3% in the same period.