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China: pork imports to determine start of seasonal price rise

The level to which China imports pork after Chinese New Year will determine the start of the seasonal increase of the Rabobank Five-Nation Hog Price Index, according to the latest Rabobank Pork Quarterly report.

6 February 2017
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“A lower-than-expected decline in imports will support prices in key exporting countries, while exchange rates remain the other important variable influencing prices”, according to Albert Vernooij, Rabobank Animal Protein Analyst. “Prices will also be affected by the slow increase in global supply, supported by growing productivity and rising sow numbers.”

Highlights of the latest Rabobank Pork Quarterly for Q1 2017 include:

China: positive vibes to continue



Chinese pork prices will remain elevated, but likely slightly less so after Chinese New Year. The stabilising sow herd and rapidly rising productivity will not affect the market before summer, while the continuing impact of environmental policies on industry restructuring will limit expansion.

EU: positive prospects but wildcards remain



Pressured supply and continuing exports will support prices and margins in the EU. However, rising export dependency as a result of ongoing pressured domestic consumption increases the importance of a favourable exchange rate, given rising competition from the Americas.

US: rising supply increases industry challenge



The margin split in the US industry will continue in 1H 2017. Rising production will continue to pressure farmers’ margins, while demand—both for packing capacity and for pork—will support packers’ margins. However, trade developments and the impact of exchange rates will be the wildcards, especially for packers.

Brazil: export crucial for local prices in Q1



Continuing export growth will remain key for the Brazilian pork industry, given the expected 3% production increase and the expected slow recovery of domestic meat consumption. However, all signs point to a positive 2017.

Friday February 3, 2017/ Rabobank/ The Netherlands.
https://www.rabobank.com/

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