Reduction seen in global pork prices

19-Apr-2015 - Last updated on 20-Apr-2015 at 08:51 GMT

The fallout from the Russian embargo in 2014 is still having an impact

Related tags Pig Supply and demand Us Pork

Strong supply coupled with weak demand has seen pork prices fall, putting pressure on producers’ profit margins.

The global pork industry has been “searching for stability during Q1 2015”, according to the latest Rabobank Pork Quarterly report (Q2).

The fallout from the Russian embargo in 2014 is still having an impact, as oversupply has seen prices crash.

Robust global supply growth was being driven by the US, Russia and Brazil, said Rabobank. Pork supply in the US was recovering after the problems caused by porcine epidemic diarrhoea virus (PEDv) last year, but there is a question mark over the extent of the recovery. Other influences affecting the US market include the strong dollar.

While in the EU, pork prices fell to record lows last year as supply outstripped demand. According to Rabobank, prices look set to follow seasonal developments, but are forecast to remain lower than the historical average and below break-even levels.

Albert Vernooij, animal protein analyst at Rabobank, said: “The increasing competition in the global export market will result in continuous price and margin pressure in most countries around the globe. Therefore, after the buoyant last couple of years – at least price-wise, the global pork industry is slowly moving towards the bottom of the cycle.”

Looking to Brazil, while prospects are not as good as Q1, they still remain positive, with pressured domestic consumption and difficult Russian export negotiations playing their part. While in China, the effect of declining herd numbers has been seen in the recovery of piglet prices, which should support price recovery and further import growth into the summer and beyond, said Rabobank.

According to the UK commodity analyst Mintec, US pig prices have fallen 44% since March 2014, due to increased supplies and the recovery from PEDv. In its latest price update, it said that several factors had influenced the price, including the use of vaccines against PEDv which had led to increased immunity within sows.

“The herd size in 2015 is 65.7 million head, compared to 61.5 million head one year ago, and is the largest since 2009,” said Mintec.