Global hog prices moved sharply lower, as the global recovery in production has outpaced the rebound in demand. The rapid decline in prices and resulting producer losses in some markets will slow 2022 herd growth, helping offset improved herd health and reduced African swine fever (ASF) impacts. Prices have since stabilized but remain well below the peak. Pork prices are also lower seasonally yet remain heavily dependent on pandemic restrictions and macroeconomic trends. Labor constraints in some markets and cost inflation will pressure production margins and could also slow herd growth. The pass-through of these costs to consumers is likely to weigh on demand, further dampening consumption – especially in income-sensitive countries.
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China: Producers responded to rising costs and the continued threat of ASF outbreaks by reducing the herd, thus driving hog prices to new lows and forcing high-cost producers to exit. Demand remains weak, limited by pandemic dining restrictions. In response to this slowdown, China continues to limit imports in an effort to balance supply. Given ongoing demand weakness, Rabobank expects pork supplies to remain ample following herd reduction and previous restocking, but supplies could be short of needs should economic trends improve.