Global pork industry optimistic as feed costs fall, demand stabilizes

Rabobank forecasts 6% growth in U.S. pork exports in 2024, with a boost coming in the second half from Asia.

Ann Hess, Content Director

May 8, 2024

4 Min Read
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Increased pork consumption and lower production costs in most regions are having a direct impact on hog prices, nudging pork producers to start thinking about rebuilding the global sow herd.  While the herd seems to be turning a corner after several months of decline, some regions will be unlikely to rebound, due to herd health challenges and higher regulatory costs, according to the latest RaboResearch report.

“Although there has been some stabilization of the herd and a return to growth in some regions of the EU, especially Spain, it is unlikely the region will ever fully recoup lost production given added regulatory constraints,” notes Christine McCracken, Senior Analyst – Animal Protein at Rabobank and author of the report. “Likewise, production in areas with persistent health challenges may struggle to return to peak production levels. We are seeing growth in parts of North and South America, where costs of production are lower and export opportunities remain ample.”

According to Global Pork Quarterly Q2 2024, improved herd health in the U.S., Canada and China is helping to stabilize production, boosting hog availability.

Elevated global stocks of grains and oilseeds have lowered feed costs for most producer, and an abundant South American crop has added to the inventory – putting additional pressure on prices. However, McCracken notes “growing conditions remain top of mind as the Northern Hemisphere enters the 2024 spring planting season.”

Despite a dip in consumption in key Asian markets during the first quarter of the year, McCracken says pork is maintaining its position as a cost-effective protein choice for consumers worldwide.

“This is particularly significant in light of rising beef prices. The trend toward frozen products and home cooking is expected to continue bolstering retail pork sales, with a projected uptick in value-added and processed meat sales as inflation rates peak,” says McCracken.

Both North America and Brazil have been battling for lost European Union export markets, as the EU is challenged with a decline in pork production and reduced import demand. “Since forfeiting 7% of global pork export market share since 2020, the EU now accounts for less than 40% of total global exports,” McCracken notes.

Given current hog availability in the U.S., McCracken anticipates production should be slightly ahead of year-ago levels through the summer. “Smaller hog supplies drove a rebound in hog prices with the index up 11% year-over-year and June futures topping $106 per hundredweight. This recovery, topped with lower feed costs, will allow most producers to record healthy margins through early Q4 2024. Improved profitability will incentivize production and projected hog supplies will support a 2024 production increase of 1% to 1.5% YOY.”

As for domestic pork demand, McCracken expects it to remain steady, and notes Proposition 12’s impact on pork prices “appears limited, as enforcement has been lax.”

“Pork prices are higher across the board, with strength in hams particularly notable (+32% YOY) on good retail and export demand. Loins, butts and bellies also posted double-digit gains,” McCracken notes. “We expect pork prices to remain high on tight inventories and good exports.”

Rabobank forecasts 6% growth in U.S. pork exports in 2024, with a boost coming in the second half from Asia.

For the United States and the global pork market, Rabobank anticipates a gradual resurgence as the industry limits production growth and reaps the benefits from reduced feed costs and improved consumer demand.

  • Canada: Canadian pork production is expected to continue to contract for the rest of the year, due to a drop in slaughter capacity. Rabobank forecasts a 2.7% YOY decrease in Canadian hog production in 2024. On a positive note, hog prices are moving higher seasonally and increased demand from Asia has helped boost export sales.

  • Mexico: Rabobank expects hog prices to improve in late Q2 as consumer demand  improves seasonally and hog supplies tighten following earlier herd liquidation and slower production growth. The strong peso continues to support imports, as ham and shoulders from the United States are up 18% YTD compared to 2023.

  • South Korea: Producer returns remain sluggish as the industry continues to battle cases of African swine fever. There was some seasonal improvement in demand after a disappointing start to the year, however Rabobank anticipates limited growth in imports in 2024, due to high inventories and a modest improvement in purchasing power.

  • China: Rabobank expects small fluctuations in hog prices in the second quarter, due to supply-side change. While imports have not been substantial thus far, they are expected to rebound in the second half.

  • Japan: Household pork consumption remains weak due to inflation, yet demand for imported pork is expected to increase as domestic pork prices rise.

  • Southeast Asia: Vietnamese hog prices continue to rise due to tight supply. The Philippines’s swine herd is undergoing a slow recovery, which may aid in increased imports in 2024.

  • Europe: Pig prices have been supported by seasonally improved demand and ongoing tight supply, while exports remain under pressure.

  • Brazil: Exports slowed in March 2024, but are still higher than 2023. Rabobank expects profitability to improve as feed costs decrease, while live hog prices hold steady.

About the Author(s)

Ann Hess

Content Director, National Hog Farmer

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