EU short-term outlook report published
The latest EU Commission Short-Term Outlook for arable crops, dairy and meat markets in 2016 and 2017 has recently been published.
Globally, there has been stronger than expected economic slowdown during 2016, fuelled by low non-agricultural commodity prices and market uncertainties. EU growth for 2016 is anticipated to reach 1.8% according to IHS. Estimated 2017 growth levels have also been downgraded since May last year, to 1.3%. However, with commodity prices now recovering, the overall global situation is anticipated to improve next year.
Within the pig meat sector, exports to China have been supporting the EU pork market and are expected to reach a record 2.7 million tonnes this year. Chinese demand has helped support EU pig prices, which have been on the rise since April. The industry has also been buoyed by generally low feed prices, particularly for soya, although these have firmed a little of late. Feed prices are anticipated to remain low, as the global cereal harvest is expected to be such that more grains are available for feed production.
Looking forward, pig meat production is expected to slow in the second half of the year, as the sow herd has been declining, leading to reduced piglet availability. Overall, this is anticipated to leave pig meat production for 2016 up only slightly on the year (1%), at 23.6 million tonnes. Production is then forecast to fall back slightly in 2017. With the export market currently favoured by operators, this may lead to a shortage of pig meat on the EU market. Combined with subdued consumer demand, this means that consumption per capita is anticipated to decrease by 2%, relative to 2015, to 31.9kg/head this year.
Nonetheless, the report warns that the current export volumes to China should not be taken for granted in the medium term. Aside from the aforementioned declining EU production capacity, the euro/yuan exchange rate and the current slowdown in the Chinese economy ultimately also threaten to depress trade. Total exports are, therefore, forecast to fall back slightly in 2017.
Bethan Wilkins, Trainee Analyst
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