News last update:Feb 25, 2016

EU’s sow group housing - aided Q3 pork price hike

According to Rabobank’s Q4 Pork Quarterly the Q3 pork prices of 2013 showed double digit increases in almost all major producing regions. The main drivers in the EU were, the impact of the introduction of sow group housing in January 2013 and the continuing robust import demand.

In the United States the tighter-than-expected supply, due in part to the impact of the porcine epidemic diarrhoea virus (PEDV), was also a main contributor.

For the remainder of the year, global pork prices are forecast to remain elevated, supported by demand resulting from start of the Chinese festival season. The limited increase of the sow herd in almost all regions shows that farmers are cautious to expand production. Despite the positive prospects with regard to the feed prices, farmers first want to regain part of the lost margins of the last few years before expanding production.

Into 2014, declining feed costs will continue to support slow herd rebuilding. Combined with productivity increases, this will result in higher supply and, likely, lower prices. However, the price slide will be slow due to the limited growth of sow numbers, the continuing demand growth in Asia and still relatively high feed costs, which will curb supply growth at least until mid-2014.

The approval of Shuanghui's acquisition of the largest global pork company, Smithfield, has been yet another sign of China's growing dominance in the global pork industry. The country's import demand has been exerting more and more influence on prices in different regions throughout the world in the last few years. The acquisition is but one illustration of China's on-going search for sufficient pork supply to feed their growing and wealthier population, a situation which will continue for the foreseeable future.

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