Risk, opportunity ahead for global pork sector in 2020
ASF to continue to spread, limiting production, as Asia-Pacific attempts restocking.
Krissa Welshans, National Hog Farmer
Nov 22, 2019
Pork production in 2020 will see a further decline, although it will be less than recorded in 2019, as the industry begins to recover from the effects of African swine fever (ASF), Rabobank reported in its "2020 Global Animal Protein Outlook." However, ASF isn’t going away anytime soon and will continue to dominate the animal protein picture, having an impact into the 2020s, the bank said.
The U.S. is expected to increase pork production once again in 2020, but Rabobank said an economic slowdown could hamper domestic consumption. As such, trade remains important for the sector in North America.
The report said productivity gains will exacerbate the U.S. oversupply of pork and poultry, limiting domestic price improvement. However, improved access to critical markets in Mexico and Japan could lead to better prices for exports. The U.S. also remains specifically focused on China trade terms, according to the outlook.
Rabobank forecasts pork production in Brazil to increase 4% year over year in 2020. This increase will be driven by strong demand in export markets, especially in China, which now represents 30% of shipments and is the main destination for Brazilian pork. Growth to China has been facilitated by the approval of additional pork plants for shipments from September to November 2019.
Brazil’s pork exports to Russia were banned in 2018, but Rabobank said the flow picked up again in 2019, although Russia’s demand is much smaller than China's.
Despite the strength of exports due to ASF, Rabobank said only a modest supply response is expected in Europe, with production up 1.25% in 2020 after a marginal increase in 2019. “This muted response will keep prices elevated in Europe in 2020,” the report noted.
The ASF situation in Eastern Europe is also a source of uncertainty for production. Further, Rabobank said environmental policies, especially regarding manure management, continue to pressure producers in Germany and the Netherlands, which is home to 24% of the total European Union sow herd.
Production expansion in Spain continues but may slow slightly in 2020, Rabobank said, adding that the integrated approach in Spain is more responsive to market conditions and may serve as a model for closer supply chain integration in other countries.
According to the outlook, Europe’s pork exports remain important to overall performance in 2020 and should reach a new high in 2020, based on strong trade demand from China and other parts of Asia affected by ASF.
“While the direct beneficiaries are the plants (and storage facilities) holding export licenses, the effects will be felt across the market, as prices remain at high levels,” Rabobank said.
ASF rampant in Asia-Pacific ...