Spring edition of EU short-term outlook for EU arable crops, dairy and meat markets published
The European Commission has published its latest EU short-term outlook covering 2018 and 2019.
During 2017, prices of crude oil and natural gas increased significantly; oil prices are now as high as they’ve been since the price crash in 2014. Prices of fertiliser during quarters three and four of 2017 increased in line with the price of natural gas especially for nitrogen-based fertiliser. The FAO food price index remained stable through the first half of 2017, having risen sharply through 2016, and then dropped slightly after the summer largely driven by lower dairy product and sugar prices.
The world economic recovery is forecast to continue in 2018 with growth of 3.4%, slightly above 2017 levels, and is expected to continue into 2019, although at a slower rate. How the trade situation between the US and China develop is clearly a risk to this forecast. Click here for some background to the US/China trade dispute. Brexit too, continues to add uncertainty to economic growth levels as negotiations continue. The US dollar has been weakening against the euro since summer 2017, and there is still some uncertainty around the US dollar value compared to other currencies.
EU pig sector
The EU sow population grew by 1.4% during 2017, according to the December 2017 livestock survey, having declined in 2015 and 2016. There was significant growth in many of the main pig meat producing countries, including Poland, Denmark and the Netherlands. The German sow herd however, continued to contract (-4,500 head). EU pig meat production declined slightly in 2017, but based upon the December 2017 results, when an increase in both slaughter pigs and piglets was recorded, production in 2018 is set to rise. Sustained price pressure may result in production going on to decline in 2019.
In 2017, pig meat exports declined by 9% in volume and 2% in value on 2016 levels, however 2016 was a record breaking year for EU pig meat exports and 2017 levels were still 15% above 2015 levels. Exports to China declined by 34% in 2017 on 2016, although exports to other countries such as the US and Philippines increased. China has been restructuring its pig industry since 2015, so moving forwards, import demand is expected to stabilise. Total EU exports are forecast to rise by 2.5% in 2018.
Imports of pig meat into the EU are forecast to rise in the coming years following the implementation of the Comprehensive Economic and Trade Agreement (CETA) with Canada. Click here to read more about CETA.
Rebecca Oborne, Analyst
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