Rabobank: promising outlook for the second half of 2013

It appears the seasonal trends in the pork market in the Northern Hemisphere are reversing with strong export demand and high prices in the second half of the year.

Monday 15 April 2013 (5 years 4 months 5 days ago)
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According to a recent report by Rabobank, the global pork sector has experienced a stable first quarter in 2013, with supply and demand more or less in balance, resulting in stable prices for the Rabobank five-nation finished hog price index. This stabilisation, in combination with the slow downward pressure of feed prices and the adjustment of most sales contracts to the new price levels - and despite the relative lacklustre demand development - gave the industry momentum to regain part of the margins lost in the last couple of years. However, at the farmer level, the lower than expected hog prices limited the earlier upswing of margins where it was hoped for.

China, the US and Russia saw pork prices drop due to increased availability which more than offset the slow developing demand. In China, production recovered more quickly than earlier forecast, while in the US the expected production decline did not commence as productivity continued its steady growth and exports slowed due to the strengthening of the US dollar. In Russia, new capacity and higher imports resulted in surging supply. Prices stabilised in the EU, pressured by the declining demand and exports, while in Brazil an unexpected increase was experienced in January, followed by a lower than normal seasonal decline.

With the growing importance of Chinese and Russian imports, combined with the growing export dependency in the US and EU, it appears the seasonal trends in the pork market in the Northern Hemisphere are reversing with strong export demand and high prices in the second half of the year and a difficult market in the first half. If this development continues, Rabobank believes the impact will be huge for the pork industry in the Northern Hemisphere. This will be apparent not only in the changing seasonal price development, but also in the carcass valuation, which differs between the Northern and Southern Hemisphere and between spring and autumn.

Thursday April 11, 2013/ Rabobank/ Netherlands.
https://www.rabobank.com/

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