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.

New York, NY — In its Q2 report, Rabobank says the global pork industry searched for stability during Q1 2015, with strong supply growth and relatively weak demand driving the market.

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: “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 U.S., 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.
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