Global pig prices have fallen steadily throughout 2015, following an exceptionally high year for prices in 2014.
Based on the prices of the four major exporters (the EU, US, Canada and Brazil), the average export pork price finished 2015 at $2.38/kg. This is the lowest level for over six years, $0.57 lower than the same point last year and over a dollar less than the price peak recorded in June 2014.
Several factors have combined to drive down value in the global pork market. The well documented supply glut following the Russian bans in 2014 has put downward pressure on EU, Canadian and US prices.
The EU price has only just started to stabilise in January 2016, in no small part due to the short lived Private Storage Aid scheme. However, the EU price is now at a 12 year low. Coupled with this, the increased production levels in the face of subdued consumer demand have further negatively impacted prices.
US prices have fallen in 2015, as supplies continued to increase. The high domestic prices in the wake of the 2014 PEDv outbreak attracted many producers to expand. The strong dollar has also impacted the US price, forcing it down in an effort to compete on the global stage.
The value of Brazilian pork was significantly affected by the weakening of the real against the dollar, attributed to the recessive Brazilian economy. While this helped the volume of pork exported to a range of markets, the effect on value was very dependent on the currency involved, with prices stable in reals but falling sharply in dollars.
Depressed global prices will provide little comfort to EU producers at a time when the EU price is so low. Export prices will need to stay low to compete and, therefore, it is likely that pig prices will remain under pressure, at least in the short term.