Rabobank Issues New Report On Pork Industry
Rabobank has published a new Q3 report looking at the global pork industry, forecasting a stabilization of global pork prices with possible downward pressure in the next few months, but a rebound in prices along with a decline of pork production in 2013.
The report, authored by Rabobank’s Food & Agribusiness Research and Advisory group, says that surging feed costs are likely to have induced herd liquidation. Sow culling will increase pork supply and weight, pressuring prices downwards for the remainder of the year. This will likely limit the previously expected strong price levels towards the end of the year. In addition, it will weigh heavily on farmers’ profitability.
Rabobank further predicts that declining pork production into 2013 will result in a rebound in prices, but it remains to be seen if this will be sufficient to cover the booming feed costs. David C. Nelson, Rabobank’s Global Sector Strategist for Animal Protein and Grains & Oilseeds, says that while feed costs are projected to remain elevated until at least mid-2013, the primary risk to this view is the further worsening of the economic crisis, which is already pressuring global GDP growth. A slowdown in high-growth Asian markets would limit import demand and price potential.
Rabobank concludes that it is clear that we have passed the ‘no margin for error’ feed supply situation. The drought can be viewed as a major ‘error,’ and the industry has entered into a situation where sufficient sourcing at any price is the primary concern for both farmers and processors. The goal is now to limit losses.
A copy of the Rabobank Q3 2012 Global Pork Industry report is available to media on request.
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