The global pork supply is expected to be tight in the first quarter of 2023, with consumption facing uncertainty, Rabobank analysts said in the latest Global Pork Quarterly Report. Tighter supply in exporting countries will likely limit global pork trade. In addition, rising inflation and high stock accumulated in 2022 will pressure import needs.
“In a slowing economy, while pork is believed to be less impacted than more expensive proteins, there will still be some pressure on consumption. Pressure on household incomes, increased savings and a potential decline in specific channels can all pressure consumption. Managing inflation will remain important for many governments, with interest rates needing careful calibration against consumer and business confidence,” analysts shared in the report.
Trade will likely increase modestly in the first quarter, mainly as a result of the low base last year. However, analysts agree that the industry may find growth difficult to sustain through 2023, given the slow production growth in major exporting regions, mainly the European Union and the U.S.
“By contrast, Brazil, which continued to grow exports in 2022, is expected to increase production and exports this year. The further recovery in local production in Southeast Asia and China will mean demand for imports eases, particularly in 2H 2023,” the report said.
China’s COVID-19 restrictions are lifting and how the world’s largest pork market reopens will impact the global supply/demand balance.
“But when, and by how much China’s demand will rebound is uncertain,” analysts wrote. “We expect demand to evolve unevenly, due to ongoing COVID waves, macroeconomic headwinds, and weak business confidence.”
Five Things to Watch in 2023
Rabobank analysts shared five things they are keeping an eye on that could impact the global pork market.
1. Feed grain prices and volatility due to the drought in Argentina, poor U.S. harvest 2022/23 for corn and soy, lower ending stock globally, and demand uncertainties.
2. Herd health, including incidents of African swine fever (ASF), porcine reproductive and respiratory syndrome (PRRS) and porcine epidemic diarrhea virus (PEDv).
3. Post-COVID-19 consumer demand recovery in China.
4. Macroeconomic conditions that may impact investment confidence, employment and consumer responses.
5. Competing protein supplies and the competitiveness of pork in retail and foodservice channels.
