Pork Quarterly Covid-19 worsens effects of ASF crisis
Rabobank expects continued volatility in pork prices in 2020, as disruption in local markets is balanced with product shortfalls in Asia. Global pork markets also remain heavily influenced by the effects of African swine fever (ASF). While Covid-19 impacts the pork supply chain in every corner in the world, ASF remains the key factor for several regions that continue to experience outbreaks in their commercial herds.
The effects of the Covid-19 pandemic are monopolizing attention across all pork markets at the moment, and this will continue for at least the coming quarter. As Covid-19 is restricting both pork production and consumption, the entire supply chain is facing uncertainty. At the same time, ASF continues to pressure pork production in much of Asia and some parts of Europe. As Asia is the main pork-importing region, this continues to underpin activity in pork supply chains in all pork-exporting regions.
Considering the dual effects of the Covid-19 crisis and ASF, Rabobank sees global pork supply and demand down on original expectations through 2020 and into 2021. This reflects the need for the recovery of demand through foodservice channels, production to improve as current supply chain disruptions are resolved, and for trade to recover.
(Bild: Imago Images / Ingimage)
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Consumption habits Decreased appetite for pork
Hog prices remain elevated on ASF herd losses and a gradual recovery in the production sector. Producer interest in rebuilding remains good, resulting in a sharp upward trend in piglet costs. Continued outbreaks of ASF remain a concern and limit growth for smaller operations. Pork demand has recovered, albeit more slowly than anticipated.
(Bild: Imago Images / China Foto Press)
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World Trade China is in need of pork
Asian demand drove a 25% YOY increase in exports, helping to offset Covid-19 disruption. Two cases of ASF at commercial barns in Poland on the border with Germany raise new concerns.
Two plant closures and critical labor shortages at many others created uncertainty and forced a 35% drop in hog prices in recent weeks. This has created a backlog of hogs, which will quickly reach critical levels, given record supplies. Pork values have dropped, but have seen some support from exports.
Despite Covid-19 disruption, pork exports remain strong, driven by demand from China. Weakness in the Brazilian real and a shortfall in supply in Asia will support continued growth, helping to offset weaker domestic markets. Producers face higher corn costs, which should limit production.
(Bild: jojo / pixabay.com)