Tight supplies underpin livestock optimism

There is an improving but fragile outlook for livestock farmers across Europe this year as tight supplies look set to keep prices firm, according to a Rabobank report.

Margins for poultry and pork producers were predicted to improve slightly, while the already favourable conditions in the beef sector should continue due to a slight contraction of supplies, it said.

Rabobank predicted EU beef production would decline by about 93,000t (1.1%) to just below 9m tonnes in 2012, which should help keep prices firm despite lower export demand. EU poultry production was predicted to increase by 1.2% this year, in line with expected demand growth and export potential.

However, market conditions were fragile and factors such as high feed prices, the economy, shifts in export markets and exchange rates could pose risks to the industry’s margins at the primary and processing levels.

“At the primary level, the improved outlook will relieve some cost-price pressure, although average prices need to remain high to cover the feed prices, which are historically high.”

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