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Food Outlook – Global Market Analysis – June 2011

by 5m Editor
16 June 2011, at 12:00am

High feed prices and disease outbreaks in Asia limit global pig meat production prospects, according to the latest Food Outlook report from the UN Food and Agriculture Organization (FAO).


Meat and Meat Products Market Summary

High feed prices, disease outbreaks and depleted animal inventories are forecast to limit the expansion of global meat production to only one per cent in 2011, to 294 million tonnes. The increase is anticipated to be driven by gains in the poultry and pig meat sectors, while world bovine and ovine meat outputs are expected to be constrained by a retention of animals for herd rebuilding.

Strong demand for imports, especially in Asia where a number of countries are facing tight supplies and high domestic prices, is expected to foster a 2.4 per cent growth in world meat trade, bringing it to 26.8 million tonnes. Much of the expansion would stem from increased flows of pig meat, and to a lower extent, poultry and bovine meats. On the other hand, trade in ovine meat may stagnate, limited by short availabilities in traditional exporting countries.

Relatively high retail prices are foreseen to keep per capita meat consumption in 2011 stalling around 41.9kg. In the developing countries, steady economic growth may foster a minimal increase to 32.0kg, while per capita consumption in the developed countries is expected to remain at 78.4kg.

International meat prices have maintained steady increases since January 2011, progressing by five per cent over the first quarter, mainly sustained by a 10 per cent increase in pig meat prices. In the near term, the combination of strong world import demand and limited export availabilities points toward a further firming of world meat prices in the next few months.

World meat markets at a glance
2009 2010
est.
2011
f'cast
Change 2011
over 2010
million tonnes %
WORLD BALANCE
Production 283.2 290.6 294.0 1.1
Bovine meat 64.9 64.9 65.0 0.2
Poultry meat 93.6 98.0 100.2 2.3
Pig meat 106.3 109.2 110.0 0.7
Ovine meat 12.9 13.0 13.1 0.5
Trade 25.2 26.2 26.8 2.4
Bovine meat 7.2 7.5 7.7 1.9
Poultry 11.1 11.5 11.7 1.6
Pig meat 5.8 6.1 6.4 5.0
Ovine meat 0.9 0.8 0.8 0.8
SUPPLY AND DEMAND INDICATORS
Per capita food consumption (kg/year):
World 41.3 41.9 41.9 0.1
Developed 78.0 78.4 78.4 0.0
Developing 31.1 31.8 32.0 0.5
FAO MEAT PRICE INDEX
(2002-2004=100)
2009 2010 2011
Jan-May
Change:
Jan-May 2011
over Jan-May 2010
(%)
133 152 175 19.9



FAO international meat price indices
(2002-2004 = 100)

Pig Meat

Pig meat output in 2011 is forecast at 110 million tonnes, less than one per cent more than last year. In China, which holds nearly 50 per cent of global pig inventories, an elimination of sow subsidies as well as outbreaks of foot and mouth disease (FMD) and swine blue ear disease (PRRS), are limiting output growth to two per cent.

Nearby in the region, the Republic of Korea, Asia's fourth largest economy is expected to witness a severe output contraction after FMD outbreaks in late 2010 and in April 2011 led to the slaughter of nearly one-third of the national pig herd at an estimated cost of US$2.7 billion.

High feed prices are limiting expansion of production in the Philippines. In Japan, the five north-east provinces that were affected by the 'triple disaster' hosted 40 per cent of the country's pig population. Animal deaths and the slaughtering at lower weights are expected to depress pig meat production by seven per cent this year. In Thailand, high and rising pig prices prompted the Government to freeze both farm-gate hog prices and retail prices, contributing to a seven per cent production fall.

Little change in pig meat output is currently forecast for the developed countries, as high feed prices continue eroding producer returns. In the United States, poor margins will limit production gains. In Canada, where a hog farm transition programme encourages producers to exit the industry, output is expected to decrease by 1.5 per cent.

In the EU-27, industry restructuring, prompted by high feed prices and the approaching 2013 implementation of new environmental and animal welfare requirements portends a one per cent drop in production. Meanwhile, sliding EU pig prices, due to a late 2010 dioxin crisis in Germany, led to the short-term opening of a private storage aid in early 2011. Despite investments made in the Russian Federation sector, high feed prices and continuing outbreaks of African swine fever in 2011 will limit production gains.


Evolution of pig meat/feed index prices (2002-2004=1)

Trade in pig meat is forecast to hover around 6.4 million tones in 2011, five per cent above last year. Much of the increase is expected to be spurred by double digit growth in imports into Asia, which account for more than half of world trade. In the Republic of Korea, FMD-depleted supplies and the issuance of a new tariff rate quota (TRQ), which allows import of 130,000 tonnes of duty-free product through mid-year, will push up imports to the country by close to 60 percent. Japan is also expected to step up its purchases to compensate for the anticipated production shortfall. In China, recent food scares, related to reported illegal use of chemicals in pig production, may also translate into higher imports.

Pork deliveries to the Russian Federation, the second largest market, are expected to remain in the order of 800,000 tonnes, reflecting sluggish domestic consumption growth and rising production.

In Mexico, pig meat imports for 2011 are forecast to grow moderately but the expansion could be stronger if a recent agreement to solve a long-standing dispute with the United States over the cross-border use of trucking services results in the lifting of import duties on certain pork cuts from NAFTA.


*
"Reduced supplies in Asia to prompt record pig meat imports"

Strong import demand and limited export availability in competing countries is forecast to propel exports by the United States to a record. Sales from Canada are expected to benefit from a trucking dispute between Mexico and the United States in 2010. Rising import demand in traditional markets, in particular Hong Kong and Japan, is also expected to boost deliveries from China.

With continuing high feed prices, pork exports by the European Union are forecast to increase only marginally from last year's record.

Likewise, increasing internal demand and high domestic prices are limiting to two per cent the recovery of exports in Brazil from last year's double-digit fall. However, the recent opening of the Chinese market to Brazilian pork will offer an opportunity for further expansion of trade between the two countries.

Pig meat statistics (thousand tonnes, carcass weight equivalent)
Production Imports Exports Utilisation
2010 est. 2011 f'cast 2010 est. 2011 f'cast 2010 est. 2011 f'cast 2010 est. 2011 f'cast
ASIA 61,926 62,572 2,665 2,993 504 563 64,131 65,000
China 52,019 53,061 769 817 436 489 52,352 53,390
- of which Hong Kong, SAR 122 124 513 532 150 150 485 506
India 485 490 1 1 2 2 484 489
Indonesia 670 680 3 2 1 672 682
Japan 1,291 1,200 1,141 1,200 2,429 2,402
Korea, D.P.R. 190 195 190 195
Korea, Rep. 1,110 760 358 562 1,515 1,322
Malaysia 205 208 12 10 5 55 212 213
Philippines 1,731 1,737 70 75 2 2 1,799 1,810
Thailand 700 650 1 17 18 684 633
Viet Nam 2,578 2,620 42 42 33 38 2,578 2,620
AFRICA 1,173 1,187 197 204 9 9 1,362 1,382
Madagascar 55 55 55 55
Nigeria 225 227 225 227
South Africa 320 325 35 35 4 4 351 356
Uganda 110 115 110 115
CENTRAL AMERICA 1,671 1,709 721 739 97 105 2,295 2,344
Cuba 182 185 30 30 212 215
Mexico 1,165 1,195 568 575 80 88 1,653 1,682
SOUTH AMERICA 5,023 5,143 93 101 747 769 4,370 4,476
Argentina 245 250 36 40 2 2 279 288
Brazil 3,226 3,307 1 1 625 636 2,602 2,672
Chile 518 522 10 10 120 130 408 402
Colombia 190 200 7 9 197 209
Venezuela 174 178 15 16 189 194
NORTH AMERICA 12,115 12,167 624 673 2,839 3,047 9,900 9,788
Canada 1,928 1,899 189 220 1,049 1,067 1,068 1,052
USA 10,187 10,268 430 448 1,790 1,980 8,827 8,731
EUROPE 26,832 26,739 1,185 1,185 1,852 1,855 26,165 26,069
Belarus 385 390 40 39 50 59 375 370
European Union 22,544 22,341 32 32 1,754 1,750 20,822 20,623
Russian Fed. 2,260 2,298 785 786 23 23 3,022 3,061
Serbia 500 480 42 44 6 6 536 518
Ukraine 650 730 122 126 772 856
OCEANIA 475 483 219 226 35 37 659 671
Australia 335 342 170 177 35 37 470 482
Papua New Guinea 68 68 4 4 72 72
WORLD 109,216 110,001 5,705 6,123 6,083 6,385 108,881 109,731
Developing
countries
67,983 68,886 2,420 2,718 1,352 1,441 69,099 70,159
Developed
countries
41,233 41,115 3,285 3,404 4,731 4,944 39,783 39,572
LIFDCs 55,767 56,841 635 676 347 409 56,055 57,108
LDCs 1,191 1,217 138 145 1,329 1,363
LIFDCs = Low-Income, Food-Deficit Countries
LDCs = Less Developed Countries

Further Reading

- You can view the full report by clicking here.


June 2011