Global pork market outlook: Trade prospects rise, but disease and inflation hinder growth

According to the latest Rabobank quarterly pork report, global trade should pick up in the second half of 2022. A slight easing of feed costs and resilient consumer demand are improving market prospects. Still, challenges to growth remain as African swine fever (ASF) continues to spread and inflation impacts trade policies.

Trade improving, led by import demand from China
Global pork trade flows declined in the first half of 2022, mainly from weaker import demand from China, but also due to political, disease, and shipping issues, as well as the pork supply in exporting countries. While the slowing of economic growth worldwide has not yet affected pork demand, trade has had mixed performance.

Overall, global pork trade is expected to pick up in the second half of the year, largely due to the expected rise in import demand from China. In the past month, Covid restrictions in China eased and pork prices increased greatly, supporting imports. Still, despite an uptick in the second half of the year, Rabobank expects China’s imports to end 2022 down 25% to 35%. Other traditional importing countries, such as Japan, also expect imports to remain firm.

ASF continues global spread, impacting production and trade
In Europe, since its first appearance in Germany in September 2020, ASF has spread west, with two recent cases reported on farms close to the French and Dutch borders. In Italy, too, the virus has traveled some 400km from the initial outbreak area. “Most outbreaks in commercial herds happened in small-scale operations in Germany and Italy, with limited direct impact on production,” says Chenjun Pan, Senior Analyst – Animal Protein at Rabobank. “ASF-related trade restrictions, however, disrupt European markets, creating an oversupply of certain products and pressuring prices.”

In Asia, the disease continues to impact local production and prices, especially in Thailand, Vietnam, and the Philippines. Thailand’s pork supply could drop by over 35% in 2022 due to culling and liquidation activity, and pork retail prices have surged. The first global commercial ASF vaccine was approved in Vietnam in early June and is being rolled out across the country.

Meanwhile, ASF is still an issue in the Dominican Republic and Haiti, but remains contained. The North American industry is increasing testing and prevention efforts to limit the risk of introduction into local herds.

Consumer demand proves resilient
Pork consumption tends to be quite resilient in most regions. “This is because pork is neither the most expensive nor the cheapest protein, so consumption levels change slowly,” explains Pan. “The impact of a slowing economy on pork consumption is more about channels, with weaker performance in foodservice and stronger in retail, as consumers make price-value comparisons.”

Demand remains strong in North America and is improving in the EU, a reflection of seasonal movement more than a structural change. Japan, South Korea, and some other Asian countries expect weaker demand in the second half of 2022 due to rising inflation concerns, the slowing economy, and ongoing Covid risks. China’s pork market is still subject to uncertainty around Covid policy measures, but is looking more positive for the rest of the year. In Brazil, producers and processors are finding it difficult to pass additional costs on to consumers.