International Meat Prices

Meat prices ease in recent months but remain at historically high levels

In April, the FAO meat price index rose to 180 points, the highest value registered in its more than 20-year existence. Since April, prices have eased, and as of October 2011, the FAO meat price index was down to 177. However, despite the softening, meat prices remain 12 per cent above October 2010. Price gains have points the highest for sheep meat, up 35 per cent, followed by poultry and beef, up 16 and 12 per cent, respectively. The price strength principally reflects robust import demand, particularly from Asian markets and the Russian Federation, which have propelled world meat trade up by 3.6 per cent, to 27.4 million tonnes.

Pig Meat

Pig sector struggles to recover in the wake of disease outbreaks

Slow growth in Asia, which hosts approximately 65 per cent of the global pig population, is constraining global pig meat production to 110 million tonnes, only one per cent higher than in 2010. Disease outbreaks in late 2010 decimated pig herds in both China and the Republic of Korea, with the resulting shortages pushing up national pig prices in both countries by 60 per cent over the past 12 months. In China, production is estimated around 52 million tonnes, two per cent more than in 2010 but the smallest expansion since 2007. The production slow-down prompted the Government to resume sow subsidies for large producers and to release pork stocks to bring down food inflation. The impact of diseases is anticipated to be even stronger in the Republic of Korea, where increased farrowings are only partially replacing the loss of one-third of the national herd and production is forecast to contract by about 25 per cent. In Japan, lower piglet births in the provinces affected by nuclear fall-out have combined with a 13-per cent reduction in pig farms over the past three years, depressing output by an estimated seven per cent.

In South America, a 20 per cent decline of hog prices in Brazil and the liquidation of some producer operations following the imposition of export restrictions are limiting regional output gains to one per cent. However, in a region characterized by high beef consumption, the high domestic beef prices prevailing in most of the region are offering an opportunity for an expansion of consumer demand for pork, especially in countries such as Argentina, Chile, Colombia and Uruguay.

In the developed countries, pig meat production is currently forecast to stagnate around 41.3 million tonnes overall, constrained by high feed prices. In Canada and the United States, a surge of sow productivity, e.g. over 10 piglets per litter, is behind an expected one per cent increase in output in both countries, with further gains likely next year, especially if feed prices continue to ease. In the EU, the sector is expected to stagnate in 2011, reflecting shrinking profitability. Rising production costs following the implementation of new animal welfare requirements and high feed prices are prompting less efficient commercial farms to liquidate their hog inventories. In the Russian Federation, new support packages are fostering expanding investment in the sector and output.

Double-digit growth in Asian imports strengthens pig meat trade prospects

Strong world import demand is anticipated to boost pig meat trade by eight per cent in 2011, to 6.6 million tonnes. In the wake of herd decimation following last year’s foot and mouth disease (FMD) outbreak, deliveries to the Republic of Korea are forecast to rise by 57 per cent. In an effort to reduce food price inflation, pork imports by China are also anticipated to surge to record levels this year. Strong demand by Hong Kong SAR, Japan, Singapore and Viet Nam is supporting further expansion of trade. Much of the increase is expected to be met by larger exports from the EU and the United States.

In the United States, shipments are running at a record pace, which may translate into a record 17 per cent gain. Exporters in the country are benefiting from the resolution of a trucking dispute with Mexico and reduced competition in the Russian Federation, following the veterinary restrictions imposed by the country on pig meat from Brazil. Those same restraints are also favouring an expansion of exports from the EU, which are also supported by the release of private stocks in the wake of last year’s dioxin crisis. By contrast, deliveries from Brazil are now expected to decline somewhat, a reflection of reduced access to the Russian market.

Further Reading

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