Negative profit margins, weak demand and ongoing disease challenges continue to put pressure on global pork production, with destocking efforts underway in key growing regions. According to the latest  RaboResearch report, Global Pork Quarterly Q1 2024, major exporting countries will continue to struggle with demand in the coming quarter, but destocking efforts over the past year should ease the tension.

"We're looking at a soft market for pork exports, especially with the ongoing crisis in the Red Sea and Suez Canal complicating European shipments to Asia," says Chenjun Pan, Senior Analyst – Animal Protein at Rabobank

In North America, pork exports are expected to remain high through 2024, even as the pace of gain slows. U.S. pork exports are anticipated to increase 2-3% year-over-year in 2024, following a strong 2023 (+8%). Mexico remains the top destination for U.S. pork, while exports to China have idled, with no rebound expected in the near future due to large local supplies.

As for U.S. pork production, Rabobank forecasts a 0.8% increase in 2024, with levels remaining above year-ago levels through the first half of 2024.

“While still low, hog prices have bottomed out seasonally, and will continue to move higher in the coming weeks,” Pan notes. “Producer margins will remain negative through spring but should be helped by lower feed costs and a gradual decline in supply.”

Corn and soybean prices have declined by 15% to 25% over the past 12 months. Further price declines of feed grains are possible given the sluggish demand and rising supply globally, Pan notes.

"Lower feed costs are a welcome relief for pig farmers, improving margins in a time of uncertainty," says Pan. However, she cautions that weather-related volatility could still impact supply and price movements.

Other input costs, such as labor, insurance and financing, are not expected to come down in price for most producers in 2024. The Red Sea and Suez Canal crisis have impacted shipping times and costs, and the situation could last well into 2024, Pan notes.

Pork consumption around the globe remains resilient and pork has been well positioned given the inflationary pressures other animal proteins are facing, Pan notes.

"Pork continues to be a staple protein, holding its ground against more expensive meats like beef," Pan explains. The easing of inflationary pressures and an economic rebound in some regions are likely to support this trend.

In the U.S., pork values are expected to remain volatile in Q1 2024 due to ample supply and large volumes of competing proteins. Markets are also still adjusting to the Jan. 1 enforcement of California’s Proposition 12.

Global pork market

As for pork activity in global markets, disease outbreaks will continue to hinder growth in 2024. However, productivity is expected to improve in 2024, driven by genetic gains, better farm management and cost reduction strategies.