According to the latest RaboResearch report, the global pork market is affected by the recession causing a supply/demand imbalance.
By Andrew Joseph, Farms.com; Image supplied by Rabobank
According to the RaboResearch quarterly pork report put out by Rabobank, the global recession is playing havoc with the pork market.
Rabobank is a global cooperative bank that has been creating a future-proof society by tackling major societal challenges for the past 125 years.
The report stated that the global recession is affecting pork demand and increasing volatility, and although it predicts an uptick in trade in 2023, the re-opening of China comes with a dual-edged sword honed with both opportunities and uncertainties.
Even though pork is impacted less than the more expensive meat proteins, it is still feeling the effects of the slow economy.
Regardless of pork meat’s value, consumers are watching the wallet around the world. With inflation hitting the grocery shelves, the report also noted that costs for everything have gone up—heating bills, fuel for transportation, clothing, etc.
It all plays a role in the money left over for consumers when it comes time to shop for food. While it may mean fewer people will spend money on convenience items such as fast food and a corresponding delivery of it, it also means that consumers have to decide what meats to purchase that will stretch their grocery dollar.
Again, pork is a less expensive option than some meat proteins, but its cost is still affected by the recession and inflation.
The RaboResearch report noted that managing inflation is a priority for global governments, and will carefully manipulate interest rates to hopefully maintain the confidence of both consumers and businesses.
It’s not all doom-and-gloom, however, as the report does predict a positive movement up as exporting countries tighten supply, as supply rises in countries doing the importing.
Chenjun Pan, a Senior Analyst of Animal Protein with Rabobank stated: “Trade is expected to increase modestly in Q1 (first quarter of) 2023, but it may find growth difficult to sustain through the year, given slow production in major exporting regions like the EU and US.”
Pan added that—by contrast—Brazil, which continued to grow exports in 2022, is expected to increase production and exports this year.
It is also expected that there will be more production recovery and growth in Southeast Asia and China, which will in turn lower the demand for pork imports—the report expects this to take hold in the latter half of 2023.
China has long been an interesting player in the global markets. Regardless of its political ideologies, there is no denying that China has the largest pork market, and its reopening to the global stage is important.
That it will impact the global supply-demand balance is a given, per the RaboResearch report.
“The timing and extent of a demand rebound is uncertain, and will be uneven due to ongoing Covid waves, macroeconomic headwinds, and weak business confidence,” Pan explained.
Other factors examined within the report that swine businesses need to watch for in 2023 are:
- feed grain prices and volatility due to drought in Argentina;
- poor US harvests;
- lower ending stock globally, and;
- demand uncertainties.
Of course, no report could be complete unless it also discussed herd health, especially with the still ongoing concerns around African swine fever (ASF), PRRS, and PED.
Lastly, the RaboResearch report also examined post-Covid consumer demand recovery in China, macroeconomic conditions, and the competitiveness of pork in retail and food service channels are also noted.
The post-Covid consumer demand recovery in China is concerning. Covid has been hitting China very hard again over the past two months, with up to 10,000 critical cases registered in hospitals every day—per a January 29, 2023 article in The Guardian.
And that’s just the number of patients who make it to the hospital. Will this affect the demand for Chinese pork? Probably, as people are afraid of transporting the virus across borders. Will it be forced to drop its prices to entice countries to buy its products while at the same time handcuffing the global market?
The China market issue looks to be a keen player in how the pork market plays out in 2023.
To download the full report, visit: https://research.rabobank.com/far/en/sectors/animal-protein/pork-quarterly-q1-2023.html