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Rabobank Q2 Pork Report Shows Lower Domestic and International Consumption

Rabobank released its Global Pork Quarterly Q2 Update, and some headwinds are working against the global and domestic pork industry. Christine McCracken is the senior animal protein analyst with RaboResearch, and she says they’re seeing lower trends in pork consumption.

McCracken; “We’ve seen some interesting dynamics as economic conditions have weakened, and it reflects the impact of inflation and how that can impact the overall purchases of not just pork but all proteins and all food and beverage as well. What we’ve seen here in the U.S. is some rather uninspiring pork consumption numbers as we’ve gone through the spring, and that’s put a lot of pressure on the overall market. We’ve built some inventory, and it may be that as we enter into the grilling season and people get back out into their backyards and fire up those grills and their smokers, we move some of this. I do think that’s likely.”

Inflation is also slowing international pork consumption according to McCracken; “It also affects the global markets, right? Because if we think about the same economic pressures that our U.S. consumers are seeing, it’s a bit of the same picture around the world. Inflation is a global phenomenon, and it is impacting protein consumption. China isn’t fully back online. When you think about how pork is consumed in China, a lot of that is in group settings which they’re not super excited about coming out of COVID. As it stands today, it’s been a bit of a struggle here as we’ve come out of the first quarter.”

Pork producers have been squeezed by tight global feedstocks causing feed cost volatility.

McCracken; “I think it’s gotten a bit better. The reality is we had a great crop in South America, or at least in Brazil, and that’s given them a bit of relief. They’ve had some tough times getting that product out of the country, so producers in Brazil are in good shape, but the rest of us are looking at the old crop and wondering how we’re gonna fare as we head into the next harvest. I think there are some pretty high expectations out there for the next harvest, and I think that that could combine with the large South American crop to give us some cost relief.”

While some relief on feed prices may be ahead, global feed supplies will remain a concern in 2023. In the meantime, African Swine Fever continues to be a problem, especially in China. McCracken said; “It’s going to be an ongoing battle in Asia. I think China, especially in northern China, they’re still having a pretty big issue with ASF and have probably lost, within China itself, about ten percent of their sow herd. I think where we’ve seen some progress is maybe in Europe. They’ve been able to manage it fairly well. Going forward, that’s going to be something they’ll continue to battle, and it’s because it’s in that wild boar population. If it were to get here, we’d have those same kinds of issues, but for now, it seems to be fairly well-contained.”

She says the affordability of pork compared to other proteins could give it an advantage in retail and foodservice channels during 2023.

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