Rabobank: Slight decline in pork production
Rabobank expects pork production in Europe to fall slightly in 2022. By decreasing demand in 2021, exports arose in the 27 EU countries and the Kingdom (UK) association. Pork production in these countries also increased by 2 percent between January and October 2021 compared to a year earlier.
The sow herd in several European countries, including Germany, continues to decline. "In Germany there is an accelerated decrease," analyzes Rabo-Sector manager René Veldman. 'That is due to the challenging market situation in combination with previously announced new regulations. In addition, the impact of African swine fever (ASF) is significant.
"For Dutch entrepreneurs, attention for ASF prevention is essential," René Veldman continues.
Exports to China are falling
Pork exports to China have shown a declining trend since April. Until October, 56 percent less pork was exported to China from the 27 EU countries and the UK than in the same period in 2020. Growing exports to other markets could not compensate for this. As a result, the monthly EU exports decreased in the second half of 2021 below the level of 2020.
Rabobank expects the slightly declining trend in pork exports to continue in the first quarter of 2022. After a temporary recovery in the fourth quarter of 2021, pig prices in China have fallen below cost price again in recent weeks. This indicates that the weak demand for pork continues in the first quarter of 2022.
Continued pressure on the pig market
After a slight increase at the end of 2021, the average carcass price of pigs in the EU stabilizes again. In the last week of 2021, the average carcass price was 4 percent under the five-year average. Prices will continue to be under pressure in the first quarter of 2022, Rabobank indicates, because supply must decrease to improve prices.
'We expect that low selling prices, combined with high feed costs, will put pressure on margins in the coming months", says Veldman. "It is important that companies have a good idea of the development of liquidity positions. Also include the scenario in which price recovery takes longer than we currently expect."
SOURCE: AgroXXI.ru