WASHINGTON, Nov. 4, 2015 - A new Rabobank study says that improvement in the global pork trade heading into the new year will be gradual, but evident as countries recover from a “clear mismatch between supply and demand across the globe.”
The report cites a stabilizing U.S. market, prospects for increased Chinese pork imports, and booming exports from Brazil as good signs for the international pork trade, but bleak signals for the European Union. Moving forward, issues with the feed-additive ractopamine, Russian import sanctions, country-of-origin labeling (COOL), and currency discrepancies will all play a role in the market.
In the U.S., Rabobank says 2015 will be “a break-even year” for un-hedged producers, “which is better than feared when the hog market was collapsing this spring.” The large market swings induced by the porcine epidemic diarrhea virus (PEDv) appear to have steadied, and, “despite the stronger dollar, the U.S. remains very competitive in the Chinese market.” Some of the optimism is blighted by potential retaliatory tariffs that could hit the industry due to the COOL dispute with Canada and Mexico.
Last month, USDA announced that China will resume imports from 14 U.S. pork facilities after previous issues with ractopamine. Though no firm date has been set for when imports will resume, it could help U.S. sales to the world’s largest pork market in 2016. China is still working to rebuild its herd, but Rabobank says that growth is slow due to high piglet prices, which are expected to remain strong in China due to tight supply.
Pork prices are booming in Brazil – a 23 percent jump in September – where Russian trade sanctions against the U.S. and EU give the South American country a prime export market. Through August, almost half of Brazil’s 2015 pork exports went to Russia. Devaluation of Brazilian currency will also help it be more competitive against the U.S. dollar in the coming months, Rabobank said.
In Europe, an excess of supply led to farmer protests and 500 million euros – about $551.2 million – of relief funds headed toward pork and dairy farmers stemming from the lack of the Russian export market. However, the report says Europe’s ractopamine-free pork production gives the bloc an edge in the Japanese market, although exports to that country have dropped by about 20 percent due to the depreciation of the yen.
According to the U.S. Meat Export Federation, U.S. pork exports in 2014 totaled almost 2.2 million metric tons valued at $6.67 billion. Mexico was the top export destination in volume (680,843 metric tons), but Japan was the leader in export value at almost $2 billion.
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