EU pig feed production forecast down for 2016
In 2015, total EU compound animal feed production was slightly higher than 2014 at 156.1Mt (+0.2%), as an increase in poultry feed production outweighed a decrease in cattle feed, according to the EU feed manufacturers association (FEFAC).
Nevertheless the association have forecast a year on year decrease of 0.5% in total animal feed production for 2016. Although an increase is forecast for poultry feed, albeit at a lower rate of 1%, a large fall in pig feed demand (2-3%) is the main driver behind the overall decline.
This sentiment has been reiterated by the International Grains Council (IGC) in its latest monthly report. The council forecasts global grain consumption up for 2015/16 season but moving into 2016/17, grain usage is expected to decline due to a reduction in feed demand.
The decline in demand from the EU pig sector provides further evidence that a herd contraction may occur during 2016, eventually leading to tighter supplies. It comes as the EU pig market has been struggling with low prices over the past year. Not only have pig prices been low, feed prices have stayed higher than in the UK due to the weak euro, which has pushed many producers into the red. This has become evident in some European countries, such as Germany, where a contraction in herd size has been recorded. Over recent weeks, EU pig prices have settled somewhat. However, with the USDA forecasting higher global pork production for 2016 in their latest global supply and demand report, combined with subdued demand, EU pig prices could fall once again without any tightening of supplies.