Pork producers hit by weak demand and strong supplies

The global pork industry has been searching for stability during the first quarter of 2015, according to Rabobank’s latest Pork Quarterly report.

It says that strong supply growth and relatively weak demand is driving the market.

The Rabobank report says that pork prices are sharply lower, as robust global supply growth (driven by the US, Russia and Brazil) has outpaced rather subdued demand, dragging producer profitability into negative territory.

Rabobank Animal Protein Analyst Albert Vernooij says that the increasing competition in the global export market will result in continuous price and margin pressure in most countries around the globe.

“Therefore, after the buoyant, at least price-wise, last couple of years, the global pork industry is slowly moving towards the bottom of the cycle,” he said.

In its outlook for global and regional markets Rabobank says that in the US, as supply recovers after Porcine Epidemic Diarrhoea (PEDv), the question is as to what degree recovery will be coupled with the strengthening US dollar and lower prices.

Looking to the outlook in the EU, it says that prices will follow seasonal developments, but will remain lower than the historical average and below break-even level.

With the industry slowly improving, prices bottomed out in China during March, Rabobank says.

Rabobank says that Brazilian prospects remain positive, but less buoyant than in the first quarter, driven by pressured domestic consumption and difficult Russian export negotiations.

Image: Rabobank
Image: Rabobank

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