During 2012 and 2013, both the global and the EU meat markets are likely to be under tight supply conditions, with limited meat availabilities and high prices, according to the latest report of the European Union "Short Term Outlook for arable crop, meat and dairy markets".
The impact of the drought in various world regions, and notably in the US in the first half of 2012, put additional pressure on meat supply in these markets through higher feed costs. In addition, the EU market would be affected by the on-going economic downturn and historically high levels of unemployment, which tend to push EU consumers towards cheaper meat options.
Although the 2012 EU total meat production is projected to decrease marginally (-0.6%), this aggregated number masks a sharp contrast between a strong decline in beef and veal net production (-4.8%) and a significant rise in poultry (+1.9%). On the other hand, pig meat production is estimated to contract slightly (- 0.4%), while sheep and goat meat would continue the declining production trend (-1.6%).
The 2013 projection for total meat production is influenced by the expected increase in feed costs as a result of US drought, and thus registers a further strong decline (-1.3%). Beef meat is expected to decrease by 0.5% and sheep meat by 1.5%. Pig meat production, on top of higher feed costs, would also be affected by the new animal welfare rules mandatory from January 2013, and would decline by -3.2%. Poultry meat is expected to remain again the only meat on an increasing production trend in 2013 (+1.6%), since it would partly offset the decline in the other meat types. Limited global meat availabilities, combined with the sluggish EU demand and a weaker Euro, would translate into lower EU meat imports in 2012, with an estimated decline of 4.8% compared to the previous year. Exported volumes would also decline (-1.3%). Due to the tightness of EU meat supply, particularly in the pork sector, 2013 is expected to record higher imports (+1.1%) and even lower exports (-8.8%), despite a weaker Euro. Total EU meat consumption is projected to decrease by 0.6% both in 2012 and 2013, the result of combined high domestic prices and economic recession.
Following the contraction in pig numbers, EU pig meat production is expected to decline slightly in 2012 (-0.4%) and more markedly in the following year (-3.2%). The projection for 2013 is based on the assumption that the new welfare rules would lead to a reduction in the sow herd and that expected higher feed costs would further depress production. As regards trade, the current weak Euro and the robust global demand, particularly in Russia, China and Japan, lead to a favourable outlook for EU exports in 2012, with an expected increase of 1% compared to the already very high level registered in 2011. In contrast, the production drop leads the forecast for exports to a decline by 15% in 2013. EU pigmeat imports are always marginal and would further decline, both in 2012 and 2013, to settle at 14 000 t per year. Consumption is expected to decrease in both years (-0.5% and -1.9% respectively). Pigmeat prices are likely to stay stable throughout 2012, although at high levels.
Saturday September 29, 2012/ "Short Term Outlook for arable crop, meat and dairy markets"/ European Commission.