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Cautious Growth for Global Pig Meat Sector

9 July 2012, at 1:45pm

ANALYSIS - The long term outlook for the global pig market is good with higher prices according to market analysts from GIRA Richard Brown, writes Chris Harris.

Disease problems in Asia with foot and mouth disease in South Korea and PRRS in China have been beneficial for prices in the rest of the world.

However, Mr Brown speaking at the recent World Meat Congress in Paris said that pig meat production in China is recovering and Chinese import volumes are decreasing.

One threat that could disrupt the global market is African Swine Fever that is running wild in Russia and this could have a knock on effect to pig prices.

"The big question is 'When are the wild boars going to wander across the border into Europe and the eastern EU countries?'" Mr Brown said.

Another issue that is likely to affect the global pig market is the weather and the effect it will have on grain prices.

He warned that the weather could produce a bad harvest worldwide. Planting in North America was early, and there should be good yields, but he said that the weather could still affect it all.

Mr Brown also warned that the Euro zone crisis is also hitting the market together with the problems the producers are going to face meting the new regulations for loose housing for pregnant sows.

"This could cause price disruption in the second half of next year," said Mr Brown.

"There could be a big price rise next year."

Overall meat production is growing hitting 40 million tonnes but the growth of consumption in countries such as China is also pushing global consumption up. Global growth in pork consumption is expected to push it up to 11.2 million tonnes.

EU production is also expected to grow and rise by about 1.703 million tonnes while Chia will see growth of more than 6 million tonnes.

There is also going to be a long term growth in feed grain prices as long as some countries continue with their present biofuels policies that are taking grain away from feed.

Mr Brown said that the US is expected to see a gradual growth in production following the drop in consumption and consequent drop in production because of the scares over "swine flu".

In the EU, the German industry has benefitted from a 30 per cent expansion since 2000. Spain and Denmark have seen a 17 per cent rise in their markets and the Netherland a four per cent rise. However, Poland has seen a 21 per cent reduction in pig numbers.

The rise in Chinese imports of pig meat to meet the rising demand caused by an increasingly urbanised and wealthier population has mainly been supplied by Canada, the US and EU with a small amount coming from Brazil. Other exporters have been prevented from exploiting the potential of the Chinese market because of sanitary barriers, Mr Brown told the delegates.

In the past Brazil was reliant in the Russian market but that market has now been cut because Russia has sanitary concerns about Brazilian production.

To make up for the loss of the Russian market, Brazil is expanding into other markets such as China and other Asian countries.

While countries such as Russia and China have increased consumption, production and imports because of the rising wealth, prices have also increase greatly.

In conclusion, Mr Brown predicted that 2012 will be a profitable years for the global pig sector, but "with caution".