European pigmeat price rises could peak in the third quarter of 2017 as pressure grows on key export markets, according to analysts from Dutch-based Rabobank.
The bank’s Pork Quarterly Q3 2017 report suggests that competition for export markets, in particular China, will lead to a peak and a softening of EU prices in the coming months.
Pig prices in 2017 have been at their highest for four years and are 12% up on this time a year ago, the report says.
See also: UK pig prices amongst highest in EU
As well as firm demand, the price rises have been driven by tighter supply, which was about 0.5% down year-on-year in the UK, Germany, Denmark and Poland and Italy during January-March.
The report warns that Europe’s pig industry is now in danger of pricing itself out of export markets.
European pigmeat prices are about 10% higher than in the US and higher still than Brazil – the two main competitors in export markets.
In China, pork prices have fallen by 30% from the record levels seen last year, forcing Chinese traders to “take a more cautious approach to imports in 2017,” according to the report.
Supply from China’s own pigmeat production is up by 2%, adding pressure on imports.
Rabobank’s analysts suggest Chinese imports in 2017 will be about 10% down for the year by the end of 2017, to a total of about 2.8m tonnes.
The EU share of China’s imports has already started to fall sharply in the face of the cheaper competition, Rabobank says.
Exports to China and Hong Kong have fallen 15% in 2017 year-on-year, while overall total EU exports were down for the first four months of 2017 by 2.8% compared with the same period in 2016.
Further competition is likely to come from the US, which is expanding its pig production and processing capability.
Two new processing plants will come on stream in the US in the late summer of 2017, adding approximately 7% to US packing capacity, says Rabobank.
Meanwhile the broader meat market could undermine demand for pigmeat, it says.
With poultry and beef prices tracking below five-year average levels, while pork prices are about 10% higher than five-year average levels, a further reduction in pork consumption could be expected, Rabobank warns.