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All news / Rabobank positive around EU pigmeat prospects for remainder of 2016

  • 01 Aug 2016, 11:24

According to the latest Rabobank report, market prospects for EU pig producers for the second half of 2016 are expected to be helped by tight EU supplies combined with Chinese import demand remaining at elevated levels.

EU pig supplies will tighten during the second half of 2016 in response to breeding herd numbers falling from the beginning of Quarter 3 2015 up until at least April 2016. Strong export demand combined with tightening EU supplies have seen EU pig prices rise by around 30 cent/kg over the past two months. EU exports for the first four months of 2016 have risen by 35% to 1.3 million tonnes compared to the corresponding period in 2015. Shipments of pork and fat/offal to China have risen by 155% and 49% to 328,000 and 371,000 tonnes, respectively.

Rabobank expect Chinese pork imports, including by products, to exceed 2 million tonnes in 2016. In the first five months of 2016, pork meat imports have been particularly strong, reaching 568,000 tonnes, double the level recorded during the corresponding period in 2015. Domestic supply is expected to remain tight over the coming months reflecting the scale of decline evident in the breeding herd. In May 2016, Chinese sow numbers were 25% lower than the peak five years previously at 37.6 million head. Any herd expansion will continue to be affected by new environmental legislation and fluctuating prices which should curb any significant rise in production in the short term.

Elsewhere, US producers are also benefiting from strong Chinese demand, with exports 180% higher year to date. In addition, as a result of Porcine Epidemic Diarrhoea virus (PEDv) occurring in Mexico during the end of 2015 combined with the Mexican Peso strengthening against the US Dollar. It is estimated that Mexican pigmeat imports will rise by 10% to 1.1 million tonnes in 2016 compared to 2015 levels.