Summer edition of short-term outlook for EU meat markets
The European Commission has published its latest EU short-term outlook covering 2018 and 2019.
EU pig meat production increased by 4.1% year-on-year in the first quarter of 2018. This is not surprising after the reported expansion of the EU breeding-pig herd in the December 2017 livestock survey. The growth in production was particularly high in EU-N13 (+10%) compared to EU-15 (3%). The growth rate is however expected to be somewhat smaller for 2018 as a whole, and stabilise in 2019, as depressed prices and more challenging exports dampen the growth.
EU pork exports are forecasted to rise by 2.5% in 2018, but this growth is not expected to continue into 2019. Value is anticipated to decline, reflecting pressure from increasing supplies of cheaper US pig meat.
The EU has maintained its position as the top supplier for the Chinese pig meat import market in Q1 2018, with a 62% market share. Strong demand for pork from China has been the main driver of EU exports over the past few years. However, in 2017, China imported 23% less EU pork and pig offal (-400,000 tonnes product weight) than in the previous year. This decline is expected to continue into 2018, with the latest China Agricultural Outlook (2018-2027) anticipating Chinese import demand could fall by over a quarter this year. If this arises, the EU will have to look for alternative markets. Although, the latest Eurostat figures for January-May indicate EU pig meat and offal shipments to China were only back 1% on 2017 levels in product weight. Total pig meat exports have increased to other markets in the same period this year, though the value has declined due to lower prices.
Consumption of pig meat is expected to rise to 32.5kg per capita in 2018 supported by production rising ahead of exports, and lower prices.
The world economic recovery is expected to continue in 2018, with growth forecasted at 3.3%, but this is likely to slow down slightly in 2019. International trade relations, particularly between the US and its trade partners, bring uncertainty to economic prospects. EU growth is actually anticipated to slow down in 2018, mainly due to uncertainty around the Brexit deal and lower domestic demand for goods.
Strong demand, driven by the global economic growth, means Brent crude oil prices have continued to move up since the January 2016 low. Prices hit USD 80/barrel in May, but subsequently retracted slightly to around USD 75/barrel by mid-June. The IHS-Markit forecast for the average Brent crude oil price in 2018 is at USD 74/barrel.
The FAO food price index has risen by 4% since the start of the year, mainly driven by higher prices for cereals and dairy products. Likewise, the World Bank fertiliser index showed an increase, rising by 5% between December 2017 and May 2018. Prices for potassium and phosphorus based products increased more (+6%) than nitrogen-based fertilisers (+2%).
Felicity Rusk, Trainee Analyst
Felicity.Rusk@ahdb.org.uk, 024 7647 8818