A supply shortage will continue to drive the pork import in demand in China, supporting the recovery of the global pork market, according to the latest Rabobank Global Pork Quarterly.
The report found that the main challenge in global markets remains balancing the supply glut in the US and the EU with Chinese import demand.
Pork prices in China are forecast to further increase on top of the current high level, supporting further imports which Rabobank says will likely reach 2m tonnes (a 50% increase year-on-year).
Chinese supply recovery is not expected before 2017 however, as new regulations stall herd expansion.
Rabobank Animal Protein analyst Albert Vernooij has said that the Chinese demand will result in a higher-than-expected recovery of the Rabobank five-nation hog price index, which will support pressured prices across the globe and will be particularly welcome in the EU.
Meanwhile, the report found that real recovery of the EU market will not commence before the still-ample available supply – including EU Private Storage Scheme volumes – is pushed through.
Furthermore, new measures by the European Commission are not expected to result in any structural change to the industry’s competitiveness, it found.
In the US, modest herd development and low feed prices support a positive outlook for the pork industry there.
The main wild card for the final price level is trade, which Rabobank has said might be hampered by the ongoing strength of the US dollar and sufficient availability from other exporters.
USDA forecasts global pork production to be down for 2016
Meanwhile, the latest global pork outlook from the US Department of Agriculture (USDA), has forecast global production down 1% to 109.3m tonnes as declines in China and the EU more than offset gains by the US, Brazil, and Russia.
It expects Chinese production to continue to contract due to the slowing economy and continuing repercussions of environmental regulations.
EU production will decline as low prices spur herd contraction, it found, while increased exports driven by a weak currency and improved market access will raise Brazilian production.
In Russia, the USDA expects production to continue moderate expansion but at a slower pace due to the struggling economy and competition from lower global pork prices.
Exports by major traders have been forecast 6% higher to a record 7.6m tonnes.
