Rabobank: China determines pig price trend

Rabobank foresees little room for a recovery in pig prices. Although production in China may decrease somewhat in the third quarter, there is enough pork in frozen storage to compensate for this dip. "The Chinese meat price determines the EU," reports the bank in its quarterly update for pig farming.

Although European pork production rose sharply in the first 4 months of this year, this increase gives a somewhat distorted picture. In the last months of 2020, many slaughter pigs stayed longer on farms due to the severely limited slaughter capacity due to corona. High feed prices and declining demand from China may limit production in the third quarter.

Chinese demand decline partly absorbed
According to the bank, the first signs of a declining Chinese demand for pork are visible. Although total exports to China still rose by 4% over the first 16 months, the first decrease was visible in April. Total exports from the 27 EU countries and the United Kingdom to China fell 8% this month from last year's level. Although Rabobank expects lower Chinese production in the third quarter, the large stocks of pork available will limit the scope for price recovery in the country.

Part of the volumes destined for China could be sold to other Asian countries during this period. For example, the Philippines imported 500% more pork from the EU and Vietnam 147% more. The prospects for exports to these destinations also remain good for the third quarter.

Prices under pressure
Despite strong export figures to other destinations, relentless Chinese demand is having a greater impact on pig prices. According to Rabobank, the average carcass price in the European Union is already 2% lower than the average carcass price in week 26 over the past 5 years. Demand within the European Union is also still under pressure due to the corona pandemic. A further recovery in demand from the catering industry in the coming period could provide support for pig prices, the bank believes.

Steve Wissink

Stef Wissink is an editor at Boerenbusiness and writes about current market developments in the dairy and pig market. He also follows Dutch and international agribusiness.

s.wissink@boerenbusiness. Nl

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