Rabobank: Global pork production projected to decline in 2013

30-07-2012 | | |
Rabobank: Global pork production projected to decline in 2013

Rabobank is forecasting a stabilisation of global pork prices with possible downward pressure in the next few months, but a rebound in prices along with a decline of pork production in 2013.

This became clear in the report Rabobank Q3 2012 Global Pork Industry. The report, authored by Rabobank’s Food & Agribusiness Research and Advisory group, says that surging feed costs are likely to have induced herd liquidation. Sow culling will increase pork supply and weight, pressuring prices downwards for the remainder of the year. This will likely limit the previously expected strong price levels towards the end of the year. In addition, it will weigh heavily on farmers’ profitability.

Rabobank further predicts that declining pork production into 2013 will result in a rebound in prices, but it remains to be seen if this will be sufficient to cover the booming feed costs. David C. Nelson, Rabobank’s Global Sector Strategist for Animal Protein and Grains & Oilseeds, says that while feed costs are projected to remain elevated until at least mid-2013, the primary risk to this view is the further worsening of the economic crisis, which is already pressuring global GDP growth. A slowdown in high-growth Asian markets would limit import demand and price potential.

Rabobank concludes that it is clear that we have passed the ‘no margin for error’ feed supply situation. The drought can be viewed as a major ‘error,’ and the industry has entered into a situation where sufficient sourcing at any price is the primary concern for both farmers and processors. The goal is now to limit losses.

Rabobank Group is a global financial services leader providing wholesale and retail banking, asset management, leasing, real estate services, and renewable energy project financing. Founded over a century ago in the Netherlands, Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries, and is among the highest rated private banks by S&P and Moody’s. Internationally

Rabobank’s Food & Agribusiness Research and Advisory group is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all major sectors of agriculture.

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ter Beek
Vincent ter Beek Editor of Pig Progress / Topic: Pigs around the world