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After a strong first half of the year, global trade is expected to weaken going forward. Despite lingering feed price volatility, production costs should improve modestly.
Sluggish economic growth continues to impact consumers. Slower exports, rising unemployment, and waning investor confidence are concerning issues for China, some of Southeast Asia, and South American countries, while rising wages, tight labor markets, and sustained high (food) inflation are pressuring North America and Europe. In all cases, consumers are changing: They are trading down, buying smaller portions, and switching channels. Still, pork – which is cheaper than beef and premium seafood and more expensive than poultry – holds a relatively stable position on consumers’ plates.
Feed prices are softening, but uncertainty remains due to short-term factors. Corn and soybean prices have been volatile entering July, due to the smaller-than-expected soy planted areas and larger-than-expected corn areas in the US and weather issues, and on Black Sea grain corridor uncertainty. Rabobank expects feed prices to soften in the third quarter but remain supported by relatively low stock-to-consumption ratios in many countries. While there is some room for prices to drop further in the coming months, they will stay above pre-Covid levels.
Herd health is still impacted by disease outbreaks. African swine fever (ASF) continues to impact production in Asia and Europe. While ASF outbreaks have generally slowed in the second quarter, they appear to be persistent in some regions, causing disruptions to local supply. In addition, porcine reproductive and respiratory syndrome (PRRS) remains a challenge in Spain, causing a material drop in production. Herd health improvements continue to be a major task for producers worldwide.
July 2023/ Rabobank.
https://research.rabobank.com
