Rabobank: uncertainty makes pork producers cautious

Rabobank: niepewność sprawia, że producenci wieprzowiny są ostrożni

Stable headage

The bank, wrote in its latest update, that global sow headage remained stable through the third quarter of 2024, with little sign of expansion despite improved profitability in some regions. Christine McCracken senior animal protein analyst at RaboResearch said in a press statement that she expects a seasonal increase in production as temperatures cool and fresh corn becomes available, although herd health challenges will typically increase during this period.

Bioinsurance

Bioinsurance remains a top priority due to ongoing disease risks. Disease outbreaks in South Korea, Russia and the EU have led to production losses in the second half of 2024, limiting herd recovery despite effective bioassurance measures. China’s easing of disease pressures should support a return to herd growth in 2025. Slight increases in production are also expected in Brazil, the US and southern EU countries.

Roser pork production in the EU

Rabobank wrote that pork production in the EU as a whole (27 countries) and the UK year-on-year between January and July 2024 increased by 3 percent. The increase was evenly split between increased slaughter weights, as well as higher slaughter numbers. Despite this, sow populations in the EU’s 8 largest pork-producing countries fell by 0.6 percent compared to the end of 2023. This is in line with production difficulties in the Netherlands, for example (where a 10-15 percent year-on-year decline is forecast), while Spain continues to struggle with the PRRS Rosalía strain.

Good year for feed production

Global feed stocks are approaching their best level in years. Because of this, pig production costs are lower in most regions, RaboResearch wrote. However, the drought in South America and Asia indicates that feed cost benefits are not uniform, the bank warns. In 2024, lower corn and soybean meal costs provided margin relief in some regions, while lower wheat supplies kept costs high in others. A large North American harvest has rebuilt stocks, the bank wrote, citing a projected 10 percent increase in soybean production and another large corn crop in the 2024/2025 season.

According to Christine McCracken, with global stocks providing an adequate buffer, she anticipates another year of moderate profit costs for most leading pork producers in the 2024/2025 season. RaboResearch added that concerns about local production shortfalls due to the La Niña weather phenomenon are focused on South and Central Asia, southern South America, northern Mexico and East Asia.

Positive trend in pork consumption

When it comes to pork consumption, RaboResearch is optimistic. Consumption continues to improve, driven by better economic trends. Lower energy costs are helping to slow inflation, although higher service and food costs are weighing on consumers. Stronger seasonal demand and the high cost of competitive proteins should support favorable consumption in the fourth quarter of 2024. McCracken said consumer confidence due to ongoing economic difficulties remains a challenge in many markets. Consumption trends will affect prices, investment decisions and global trade.