OECD-FAO Outlook: Meat prices to decline in real terms
In real terms, meat pieces are projected to decline over the next decade, according to the latest OECD-FAO Agricultural Outlook.
This reflects slower growth in meat consumption and expanding supplies. However, feed grain prices are expected to be low relative to the previous decade. So, meat-to-feed price margins generally remain within historical levels.
Nonetheless, sheep meat prices are forecast to remain high until 2020, driven by constrained supply in Oceania. Prices should drop back once the Australian flock recovers from the current drought. In contrast, real beef prices are anticipated to decline quickly in the short-term, due to ample beef supplies in South America and the US. Although most additional per capita meat consumption is expected to come from poultry, gains are also expected for beef and sheep meat, as income growth enables consumers to diversify their diets.
Despite an overall downward trend, pig prices are expected to remain cyclical over the next decade. Increased supply from Brazil and the US will be important, alongside higher import levels. Pig meat consumption is expected to decline on a per capita basis, as several developing countries are not traditional pork consumers.
Notably, the report is rather more conservative when anticipating the impact of ASF in China than other analysis. Chinese pork production is only forecast to decline by 5% this year and subsequently recovers in 2020. In contrast, USDA, Rabobank and GIRA forecasts range from a 10-35% decline this year, taking much longer to recover. As such, it is possible the report underestimates the impact of this epidemic in the outlook. There is also uncertainty surrounding the impact of existing or future trade arrangements, and the potential for changing consumer attitudes to meat consumption.