The latest report from RaboResearch notes that pork producers around the world are cautious about the future of trade, disease, and consumption uncertainties.
RaboResearch has released its latest report, noting that despite improved profitability, global pork producers are cautious about herd rebuilding due to ongoing trade, disease, and demand uncertainties.
As well, logistical challenges and potential impacts from the La Niña weather system further complicate the market, even while pork consumption shows a positive trend.
Cautious Approach to Herd Expansion
The global sow herd remained steady through Q3 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 moderated disease pressure should support a return to herd growth in 2025.
Slight production growth is also expected in Brazil, the US, 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, cautioned McCracken.
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 explained.
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 (this is what Brazil calls its second crop planted right after the soybean harvest) 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 Q4 2024.
“Consumer confidence remains a challenge in many markets due to ongoing economic difficulties. Consumption trends will impact prices, investment decisions, and global trade,” summed up McCracken.