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Steady production growth and weaker consumption continue to weigh on global pork markets and trade. Improved health and productivity are boosting production and feed prices have improved, though uncertainties remain. Meanwhile, pork consumers remain cautious amid geopolitical uncertainty.
After facing productivity challenges in 2022/23, several key growing regions appear to be turning a corner. While disease pressure is still an issue in some regions, overall herd health has improved. A renewed focus on cost reduction, given inflationary pressures resulting in the elimination of less productive operations, is also contributing to the rebound in production per sow. Although this improvement is a welcome trend and lowers costs, the additional production is compounding regional oversupplies and weighing on the market.
Corn and soybean prices moved lower in Q3 2023, after a good North American harvest helped rebuild stocks and expectations for a large South American crop emerged. While better, oilseed inventories remain below pre-Covid levels and leave little margin for error. The rapid shift to an El Niño pattern means weather remains a concern.
Pork consumption remains steady despite ongoing inflationary headwinds, yet the pack types and sales channels continue to shift. With consumers still cautious, particularly in light of rising geopolitical uncertainty, we expect an ongoing focus on reducing spending. Pork consumption should benefit from the high cost of competing proteins and more consumers cooking at home.
November 14, 2023/ Rabobank.
https://research.rabobank.com
