High-flying pork prices 'come back down to earth'

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.

Looking towards summer, these challenges will remain. The weak demand and the forecast further appreciation of the US dollar against most currencies will especially further complicate new price level negotiations.

The key for exporters will be to hold and, if possible, expand exports to key import markets. For importing countries, where to get the highest quality for the lowest possible price will be the deciding factor.

The increasing competition in the global export market will result in continuous price and margin pressure in most countries around the globe. Furrhe pressure will come from the fact that feed costs are expect to stabilise around current levels.

The impact of PEDv continues to be the key driver in the US. The much lower-than-expected impact will encourage production recovery, and will continue to challenge prices - together with difficult exports due to the strengthening of the US dollar.


Prospects for the EU remain meagre, with higher production and lacklustre demand limiting the seasonal improvement of pork prices to, at best, the average seasonal level.

Despite the negative start of the year, due to strong supply and pressured exports, the Brazilian pork forecast remains positive, with both domestic consumption and exports expected to pick up during Q2.

However, final price and margin levels will be determined by Russian market developments and the impact of the macroeconomic and political crises on domestic consumption.

Rabobank animal protein analyst Albert Vernooij says: “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.”

Outlook for global and regional markets:

· In the US, as supply recovers after PEDv, the question is as to what degree recovery will be coupled with the strengthening US dollar and lower prices.

· In the EU, 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.


· Brazilian prospects remain positive, but less buoyant than in Q1, driven by pressured domestic consumption and difficult Russian export negotiations.