A recent global forecast by the United States Department of Agriculture Foreign Agricultural Service (October 2008) predicts world pork production will rise slightly, by 1 percent, to be higher at 97.9 million tons in 2009.
With about half of the world's total pork production, China continues to be a major player in the industry and is forcast to increase its production by over 3 percent, or 1.2 million tons, higher in the coming year. In fact, China is such a significant force worldwide that if it were excluded from the total, the forecast for 2009 world production would virtually remain unchanged due to a shrinking share in the EU-27 and the U.S. largely offset by growth in Russia and Brazil.
The predictions are based on what the agency deems 'generous' profits in the swine industry in China, enhanced with continued government subsidies and tax incentives to help stimulate production. Those factors would likely raise production predictions to an even higher level were it not for the expectation of heightened production costs. While improved, production is not anticipated to return to is pre-porcine reproductive respiratory syndrome level in the coming year.
Both the United States and the EU-27 are expected to paint a different picture for pork production. In Europe, production is expected to continue its downward trend as high feed prices provide pressure on the pig crop and slaughter decisions. Farrowing intentions in the U.S. are already signaling that a production drop by nearly 2 percent is likely. Expected to post its own positive figures, Brazil is counting on production costs to moderate in the coming year. In the wake of large corn and soybean crops, pork production is anticipated to climb over 3 percent at nearly 3.2 million tons. Demand for Brazil's pork is expected to continue to be robust on both the domestic and international markets.
Players in the export marketplace are likely to find a scenario of decline for the first time in nine years, to nearly 6.1 million tons. Exports are forecast at 2 percent (130,000 tons) weaker, driven primarily by drops in U.S. and EU-27 shipments, although partially offset by Brazil. The report says lower U.S. exports are expected, primarily due to a weakening of Chinese import demand. China's lessened need for imports impacts the U.S. forecast more than other key players as it was the primary beneficiary of China's recent import surge. While Japan and Mexico are expected to remain stable targets for U.S. exports, these key markets are still not enough to soften a predicted decline of 99,000 tons (4 percent) to nearly 2.3 million tons. The report says, however, that this downturn will have minimal effect on the U.S. 38 percent share of world trade.
Turning to the EU-27, exports are forecast at more than 3 percent less at nearly 1.5 million tons due to lower production, reducing available supplies for exports. Again, Brazil is expected to pick up some of the market slack with a rebound forecast to be over 4 percent to 705,000 tons as shipments to non-traditional markets continue to flourish. Other than China, countries which traditionally lead in pork imports are not expected to collectively show much change.
Little change anticipated
Japan, the world's largest market, is expected to remain stable, for instance, despite rising beef imports. China's rising production and price stability are anticipated to ease the demand on imports by 25 percent to 360,000 tons, although it is worth noting that imports generally account for one percent or less of its totally supply.
Turning to Russia, rising production there has still been lagging behind the expanding consumption, which will continue to fuel import demand, while in Mexico, a weaker economy is expected to curb consumption, driving imports nearly 2 percent lower to 530,000 tons. Korea is also expected to see imports shrink, due to the return of U.S. beef to the market, mandatory labeling of country of origin at restaurants and the suspension of Chilean pork imports due to dioxin residues. These factors combine to lower import forecasts to 440,000 tons. In the Ukraine, import forecasts are higher by 29 percent (40,000 tons) as pig inventories there are expected to decline by 10-15 percent in the face of higher feed grain prices.