EU short-term outlook published – autumn 2018
Over the summer the dry conditions caught many headlines and also affected European cereal production, with total production estimated to be down by 8% on the average, according to the European Commission.
Brent crude oil prices have continued to trend at higher levels with global economic growth continuing to recover especially in the US. Supplies of oil were tightened by US sanctions on Iran and also considerably lower production in Venezuela. Global economic growth is expected to continue; however growth in the EU is being held back slightly, in part due to uncertainty around post-Brexit relations with the UK. Escalating trade disputes (largely between the US and China), are bringing some uncertainty to trade flows.
The latest census data recorded a small decline in the number of breeding sows, but an increase in slaughter pig numbers. Production is forecast to grow in the latter part of 2018, and then reduce in 2019 as the reduction in breeding herd size feeds through.
Uncertainty surrounds world pork trade, in part driven by African swine fever, in both China and the EU, as well as trade tensions. China continues to be the main destination for EU pork exports, although these have declined slightly from last year. Shipments to Hong Kong dropped significantly, although this was partially offset by increases in exports to South Korea, Philippines, US, Ukraine and Vietnam. Overall in 2018 exports are expected to grow by 2.5% and then contract, in-line with production, in 2019.
Average EU pig prices have trended below year earlier levels through 2018, and are expected to remain under pressure through to the end of the year as production increases. Where prices move after this largely depends upon global trade conditions.
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Rebecca Oborne, Analyst
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