News Pigs
Rabobank gloomy about pig price
Until recently, Rabobank was positive about the pig price, mainly because of the large meat shortage in China. However, sentiment has turned quite a bit. The financier expresses her concerns in the second quarter update of 2020. With the corona crisis gripping the world, the outlook does not bode well.
The production shutdown in China has provided a positive boost in some countries. Pork production shot up and prices went through the roof. Meanwhile, production is still high, but the sales market has shrunk considerably due to COVID-19. Now that most countries maintain an (intelligent) lockdown, the consumption of (pork) meat has plummeted. This is largely due to the disappearance of the food sector.
Pig prices and trade worldwide
Rabobank takes into account different countries and continents in its quarterly analysis. China, Europe and the United States play a major role, as do Mexico, Canada, Japan, South Korea, Vietnam and Brazil. In every country, 2020 started with high pig prices. By now, they have all experienced a drop or stabilization in prices.
Rabobank is anticipating further price declines and stabilizations in the coming months. This is due to the uncertainty that still prevails around the corona crisis. Many countries are still dealing with trade restrictions and a decline in production. For example, production in China is far from being back to normal and total production in Europe has also fallen by 1,7%. Production in Vietnam fell further by 19,3%.
Furthermore, many export figures have risen sharply, especially to China. For example, the EU exported 63% of its meat to the Asian powerhouse and European exports to Vietnam increased by 41%. In the US, exports increased by 42%. More than 85% of meat exports went to China. In addition, Canada and Brazil also benefited from the enormous Chinese meat demand. Canada's exports to China increased by 52% and Brazil exported 33% more meat, the value of which also increased by 63%.
In addition to the problems with trade and logistics, the exchange rate also has a finger in the pie. For example, Mexico is dealing with a 25% depreciation of the Peso against the US dollar.
Issues
In addition to the disappearance of the food sector, there are a number of other problems that arise. Slaughterhouses worldwide are faced with a shortage of personnel. As a result, some slaughterhouses have had to close their doors and others are not running at full speed. Furthermore, meat products are piling up in cold stores and distribution is also experiencing problems, making trade more difficult. According to Rabobank, the World Trade Organization predicts a decline in global trade from 13 to 32%. All this is causing a lot of commotion in the market, to which pig prices are reacting.
In addition, it is not only the corona crisis that causes problems. African swine fever is still lurking. There are still commercial companies, mainly in Asia, reporting outbreaks. However, Europe is not spared either, as we now know. Now that Poland is no longer AVP-free, the AVP at close quarters poses a risk in Europe. Especially now that the outbreaks are being reported closer to the German border.
Jorine Cosse
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