‘Strong demand from China driving pork prices for Q3’

Continuing demand from China and stalling supplies will continue to support global pork prices for the third quarter, according to a new report from Rabobank.

Its Global Pork Quarterly Q3 report says that with supply forecast to bottom out and demand starting to pick up, pork prices are expected to peak somewhere during the coming months.

Volatile prices in June were just a temporary blip in the positive mood in China, according to the report.

“This will result in a further rise of the Rabobank five-nation hog price index supporting margins across the globe,” says Albert Vernooij, Animal Protein analyst at Rabobank.

Pork imports in China will likely exceed 2m tonnes in 2016, the report goes on to say.

However, there may be a number of relating factors that could adversely affect the increase in pork prices according to Vernooij.

“Wildcards are feed costs and the Brexit induced changing exchange rates which could negatively impact the upswing, especially in the EU and the US,” said Vernooij.

In Europe, the main challenge for the pork industry is to limit supply expansion, the report says.

It says that the EU currently has a competitive export position but domestic consumption remains lacklustre.

Earlier this year, Senior Animal Protein Analyst at Rabobank, Chenjun Pan, predicted China would increase its pork imports by 30% this year in order to cover the supply gap.

The start of 2016 saw a considerable spike in pork prices in China, reaching an all-time high of over RMB 20/kg (€2.70/kg).

Poor prices and Chinese government measures to close down unsuitable farms led to destocking of Chinese pork farms over the past two years, which drove the Chinese sow herd size to a historic low.

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