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Rabobank: Global pork producers cautious amid uncertainties

According to a recent RaboResearch report, despite improved profitability, global pork producers are cautious on herd rebuilding due to ongoing trade, disease and demand uncertainties.

Pork Meat
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According to a recent RaboResearch report, despite improved profitability, global pork producers are cautious on herd rebuilding due to ongoing trade, disease and demand uncertainties. Logistical challenges and potential impacts from La Niña further complicate the market, while pork consumption shows a positive trend.

Cautious approach to herd expansion

The global sow herd remained steady through the third quarter of 2024, with little sign of expansion despite improved profitability in some regions.

“We expect a seasonal production increase as temperatures cool and fresh corn becomes available, though herd health challenges typically rise during this period,” said Christine McCracken, senior animal protein analyst for RaboResearch.

Biosecurity remains a top priority due to ongoing disease risks. Disease outbreaks in South Korea, Russia and the EU have led to production losses in the second half of 2024, limiting herd rebuilding despite effective biosecurity measures. China’s moderating disease pressure should support a return to herd growth in 2025. Slight production growth is also expected in Brazil, the U.S. and southern EU countries.

La Niña’s impact on feed production and costs

Global feed inventories are nearing their best level in years, and hog production costs are lower in most regions. However, dry conditions in South America and Asia remind us that feed cost advantages are not uniform. In 2024, lower corn and soymeal costs have provided margin relief in some regions, while tighter wheat supplies have kept costs high in others. Even a mild La Niña creates regional disparities, McCracken warned.

North America’s large harvest has rebuilt stocks, but the EU and Asia have fallen short.

“With global stocks providing an adequate buffer, we project another year of moderate cost of gain for most leading pork producers in 2024-25,” McCracken said.

Concerns about localized production shortfalls due to La Niña are focused on South and Central Asia, southern South America, northern Mexico and East Asia. Dry conditions in Brazil have already delayed soybean planting and could reduce safrinha (second crop) corn acreage in 2025.

Positive trend in pork consumption

Pork consumption continues to improve, driven by better economic trends. Lower energy costs are helping to slow inflation, though higher costs for services and food weigh on consumers. Stronger seasonal demand and the high cost of competing proteins should support favorable consumption in the fourth quarter of 2024.

“Consumer confidence remains a challenge in many markets due to ongoing economic difficulties. Consumption trends will impact prices, investment decisions and global trade,” McCracken said.

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