Chinese volatility determines global pork market

Rabobank’s latest quarterly update highlights China’s market volatility as a key driver of global pig and pork market dynamics. While hog prices in China are expected to rebound in Q3 2021, high frozen pork inventories and slowing imports will exert downward pressure on prices, affecting trade redistribution and global price trends.

Regional Insights:

1. China:
   • Pork production surged by 35.9% in H1 2021 due to high slaughter rates and oversized hogs, causing sharp price declines and losses for producers.
   • Restocking efforts have slowed due to African Swine Fever outbreaks. Q3 slaughter is expected to decline, and prices may rise modestly, limited by large frozen pork inventories.
2. Europe:
   • Pork production grew 5% year-on-year in the first four months of 2021, driven by higher slaughter weights and a backlog from late 2020.
   • High feed costs and softening exports, including a slight decline in shipments to China, will restrict further growth. ASF outbreaks in Germany pose additional risks.
3. United States:
   • Hog prices, after record highs in June, have stabilized due to strong demand but lower production caused by disease, lighter slaughter weights, and high feed costs.
   • Export declines to China were offset by gains in Mexico, Canada, and Japan.
4. Brazil:
   • Pork production began strong in 2021, supported by favorable export results in 2020. However, high feed costs are expected to hinder growth in some regions.
   • Rising beef prices have shifted domestic demand towards chicken and pork consumption.

Global pork markets will continue to be shaped by Chinese market trends, feed costs, disease risks, and shifting export dynamics in the coming months.