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Rabobank issues Q3 pork outlook

Rabobank issuing its third-quarter global pork market outlook.  The report says after bottoming-out in the second quarter, the upward trend in the pork market will continue through the remainder of 2015 and into 2016.  China will be a main driver as the enormous cull of China’s herd over the last 18 months is pushing prices up.

The bank sees limited supply growth and increased demand across the globe with the most notable recovery in the U.S., Canada and China.  Rabobank analyst Albert Vernooij says the main question is when Chinese import growth will begin and how much will it grow?  U.S. exports could be hurt a bit by the strong dollar and the limited availability of ractopamine-free pork as demanded by China.

The report goes on to say strong supplies will limit price growth in Europe and Brazil while continuing disease outbreaks in Mexico and South Korea will support and higher global prices as well.

As for the U.S. hog market, Rabobank says producer profitability has returned.  The report says the impact of the PED virus last fall and winter was not as big as anticipated which means more hogs.  That has crowded finishing capacity which has pushed hogs out to market at lighter weights.  Finishing weights in Iowa and Minnesota have declined 8.5 pounds since the beginning of the year.  In summary, Rabobank expects a 6 to 7 percent increase in slaughter numbers in the second-half of this year with a 1 to 2 percent decline in slaughter weights.  Modest expansion of the herd is expected in 2016.