Higher pig numbers and weaker exports could put EU pig prices under pressure over the coming months, particularly if African swine fever (ASF) continues to spread in Europe.
Global banking group Rabobank says it expects EU production to reach record levels in 2018, as herds gradually increase in Germany, Spain, Poland, Denmark and the Netherlands.
In its quarterly update on the pork market the bank says rising supply is a reflection of better returns seen over the past year, but could put pressure on prices.
It also highlights a range of uncertainties including trade disputes, disease risks and feed availability issues which could hit global trade.
Wild pig wall
The report says ASF could disrupt traditional trade flows if its spreads into the commercial pork production areas of the EU, with Germany and Denmark believed to be most at risk.
Restrictions on pork exports – which can last for years – are imposed in a buffer zone once ASF is confirmed in either wild pigs or on a holding.
The threat is sufficiently serious that Denmark has recently announced that it is constructing a 70km fence along the German border, designed to keep wild pigs from moving freely between the two countries.
Germany has also stepped up hunting of its wild boar population to control the spread of ASF.
The report suggests that a stronger euro reduced EU pork exports during 2017, with shipments to China particularly hit hard.
Chinese exports are expected to remain weak throughout Q2 2018 with the US-China trade war not expected to generate much additional trade in the coming months because China’s own market is already oversupplied.
Record hog numbers in the US, along with 25% tariffs on exports of any pigmeat shipped to China, are expected to weigh down the American market, with futures prices falling as a result.
UK pig producers are not overly exposed to the US market.
According to AHDB figures, the UK exported 7,711t of pork to the US in 2017 – but this accounted for only 2% of US pork imports.
Trade analyst Bethan Wilkins said: “While an increasing US domestic supply may be detrimental for UK export prospects, as falling US prices reduce the competitiveness of imported product, the high-welfare niche occupied by UK product could help support trade.”