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National Hog Farmer is the source for hog production, management and market news
February 1, 2016
The global pork market will remain weak in the first quarter of 2016, followed by some — partly seasonal — improvement leading into the second quarter. Sufficient supply and modest demand development mean the Rabobank five-nation hog price index will bottom out in the coming months, at the lowest point since 2006, after a stronger-than-expected drop at the end of 2015, according to the Rabobank Global Pork Quarterly Q1 report.
“Recent positive demand and price developments in importing countries will start to support prices in exporting countries during the first quarter,” says Albert Vernooij, analyst Animal Protein at Rabobank.
China’s market will remain elevated
In China, imports are expected to further increase, supported by strong domestic prices and further destocking of the herd in 2016, driven by stricter environmental regulations. The level of China imports and relative competitiveness of major exporters is a major dynamic in 2016.
U.S. exports will determine price level
In the United States, industry expansion is expected to slow after near-record supply growth in 2015, while packers’ margins will remain strong due to limited available capacity. Exports are expected to pick up, supported by low prices, mCOOL repeal and relisting of plants for export to China.
Private storage is the key to EU recovery
European Union pork market recovery during the first weeks of 2016 will reverse in the coming weeks, after the suspension of the European Commission’s Private Storage scheme on Jan. 21. Reopening of the scheme will be critical for further market support.
Brazil’s positive scenario will continue
In Brazil, the market is forecast to follow the steady path of fourth quarter 2015 due to continuing good domestic and export demand. This will, however, not result in higher prices due to the challenging domestic economy and low international prices.
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