European pork production is falling, Rabobank concludes in a new report. The demand for pork is also lagging. Between January and July, the export figures of the European Union and the United Kingdom were 23% lower. However, the bank expects exports to mainly South Korea and China to pick up.
Between January and July, pork production in the European Union and the United Kingdom fell by 4% compared to the same period in 2021. According to Rabobank, all signs point to a further shrinkage of pig herds in almost all major pig-producing countries. There is only one exception and that is Spain. In total, the European pig herd will shrink by 4% to 5%, according to the bank.
The bank cites rising costs of feed and energy as the reason for the decrease. Due to high inflation within these product groups, margins are currently low. Even a 55% increase in the average European carcass price compared to 2021 cannot compensate for the additional costs. It seems unlikely that profit margins will rise again in the short term. Due to seasonal influences and growing supply from Spain, the bank expects the carcass price to come under pressure.
Question is left behind
The demand for European pork is also lagging behind. High prices mean that European pork is less popular among domestic consumers and exports are also disappointing. In the first 7 months of this year, European pork exports fell by 23% compared to the same period last year. Exports to China in particular were lower. The EU and Great Britain exported more than 140.000 tons less pork to that country.
Rabobank is more positive about future exports outside the EU. Several markets import more European pork. For example, South Korea is removing import restrictions that the country had imposed in connection with outbreaks of African swine fever. In addition, August is the first month in which China imports more pork than in the same month of 2021. As a result, exports to these Asian countries are on the rise.