Rabobank: Exchange rates hurting global pork market

The global pork market will continue its slow recovery in the fourth quarter of 2015, analysts with Rabobank say. The adverse exchange rates are driving the limited growth.
The exchange rates resulted in a clearly visible mismatch between supply and demand across the globe, with elevated price levels in one group of countries and stable/pressured prices in the other countries, according to the Rabobank Global Pork Quarterly Q4 report.
The recovery of the global market in the second quarter contracted unexpectedly in July, followed by a slow recovery in the months thereafter. Depreciating currencies in main import markets pushed up prices of imported pork, which hampered import growth in the first part of the third quarter, according to Rabobank. This was largely compensated by rising Chinese imports in the second part of the quarter. Combined with the decline in domestic production in some countries, rising pork prices resulted.
"The global pork market shows a clear mismatch between supply and demand across the globe, with elevated price levels in one group of countries and stable/pressured prices in the other countries," said Rabobank Animal Protein analyst Albert Vernooij.
Supply growth in the main exporting regions (the US, EU and, to a lesser extent, Canada) was not able to reach the demanding markets in Asia. As a result, the Rabobank five-nation hog price index declined into Q3, followed by some recovery towards the end of the quarter.
The global pork market will slowly improve around the end of 2015 and into 2016, Vernooij said. Trade is expected to continue to rise, but exchange rate developments will impact both the volumes and returns in key export markets.
Beyond that, the main question concerning the world pork industry is how large the growth of pork production will be in importing countries and how this will impact global pork trade.