While global meat consumption continues to rise, market prices and margins are under pressure.
A Challenge for Producers and Processors
China will continue to exert a huge influence on global meat markets. The world’s most populous country increased pork imports to record levels in 2016, and Rabobank forecasts these import levels will remain constant in 2017. China’s beef and poultry imports are also expected to rise.
In the United States, 2016 was a very difficult year for cattle producers. For 2017, production is expected to continue growing, but consumers’ appetites are being tested as record levels are reached. The strong U.S. dollar and uncertainty over future trading relationships with China and Mexico create potential headwinds for American producers. The United States is currently the world’s largest exporter of pork to China, excluding the E.U.
According to Justin Sherrard, global strategist animal protein: “In a market driven by supply, we expect prices to come under pressure next year – a boon to consumers, but a clear challenge for producers and processors.
“With rising demand, we forecast that China will maintain its 2016 record levels of pork imports next year and could increasingly seek something akin to ‘imports-plus,’ locking in supply as it targets food safety and security for its growing population.
“Meanwhile, U.S. producers head into 2017 grappling with the potential of changes to the country’s trade policy and further currency movements. Indeed, with worldwide currency fluctuations depending on political machinations as well as central bank decisions, we are becoming accustomed to expecting the unexpected.”
New Growth Opportunities
Elsewhere, Rabobank predicts an increasingly complex production market, making it more challenging for producers to exploit opportunities. They may come under additional pressure to adapt their systems to mitigate threats, including the focus on antibiotics use, the attention on livestock as a source of greenhouse gases, and growing retailer competition. This complexity is creating new growth opportunities for the producers and processors who read the market well and respond swiftly. They are likely to respond by strengthening supply chains, coordinating inputs, and increasing transparency to improve traceability in supply chains.
Sherrard adds: “The onus is very much on producers to mitigate the concerns of consumers, particularly around animal health and welfare issues, by adapting their production models and supply chains. This is a challenge which will continue to be a major theme in 2017.”
Rabobank’s Global Outlook for Animal Protein is produced annually, providing one of the most closely watched forecasts for the coming year’s market prospects.