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EU Lowers Pork Production Forecast; Beef Production to Show Some Recovery

EUPORK-Exports

In its latest short-term outlook report, the European Commission reduces its projection for 2014 EU pork production growth to just 0.2 percent, or 22.46 million metric tons (mt) – essentially steady with last year. Pork production in 2013 was down 0.6 percent from the previous year, due in part to implementation of the partial sow stall ban. The report’s forecast of pork production growth for Denmark and the Netherlands is offset by projected declines in France, Germany and Spain. The commission currently projects 2015 pork production growth of 0.8 percent to 22.6 million mt. Some recovery in the EU’s per capita pork consumption (to 31.3 kg) is expected this year.

Russia’s suspension of pork imports from the EU due to African swine fever has now lasted nearly six months. Due to the loss of the Russian market, EU pork/pork variety meat exports are expected to drop 7 percent year-over-year in 2014 (to 2.05 million mt, carcass weight).

Exports trended higher in May, however, to 231,403 mt, exceeding last year’s large volume by 1 percent as growth to most other markets offset the loss of Russia. May exports to Japan surged to 38,038 mt, up 96 percent a year ago and the largest since 2005. The trend was similar in other Asian markets currently impacted by porcine epidemic diarrhea virus (PEDV), including South Korea (16,647 mt, +50 percent), the Philippines (15,184 mt, 95 percent) and Taiwan (4,312 mt, +281 percent). Europe also shipped more pork to the United States (9,203 mt, +85 percent) and Canada (1,288 mt, +189 percent) reflecting its price competitiveness this year. Exports to China/Hong Kong (94,713 mt, -4 percent) were lower than a year ago, but still large.

EUBeef-imports

For January through May, EU pork/pvm exports reached 1.059 million mt, down 2 percent from a year ago. But except for Russia (28,327 mt, -85 percent), exports increased to all major markets including China/Hong Kong (456,571 mt, +2 percent), Japan (147,216 mt, +45 percent) and Korea (85,383 mt, 78 percent).

EU hog prices continue to move seasonally higher, recently reaching $108.25/cwt. This is up 4 percent from a year ago in U.S. dollar terms, but down slightly in euro terms (though trending upward over the past month). Germany’s prices are up 4 percent over the past month and are 5 percent higher year-over-year. Denmark’s prices are up 1 percent from last month but still down 1 percent year-over-year. Piglet prices have been in slow decline over the past 10 weeks, falling 3.5 percent from the previous month to 49.08 euros (about $67) per head. However, this is still nearly 7 percent higher than a year ago.

The short-term outlook report also discusses the factors behind Europe’s weaker 2014 cattle prices. The industry is shifting away from beef cow/calf production to dairy, as the beef herd has fallen by 300,000 head since 2011 while dairy cows increased by 400,000 head (as of December 2013, the combined total herd was 35.4 million head). EU beef production has declined 8 percent since 2011 but is expected to turn higher by 1.4 percent this year (to 7.5 million mt) and increase another 2.3 percent in 2015. Lower domestic beef prices are expected to fuel a modest increase in per capita beef consumption this year, to 10.5 kg.

The commission is forecasting a slight decline in the EU’s beef/beef variety meat imports this year (down 1 percent to 300,000 mt carcass weight) and a steady level of imports in 2015. Total imports were down 6 percent through May at 99,749 mt, including smaller volumes from Brazil, Uruguay and Argentina but larger imports from Australia and the United States.

For chilled beef only, January-May imports were up 3 percent to 46,922 mt, as growth from Brazil (8,646 mt, +12 percent), Australia (8,558 mt, +47 percent), the U.S. (6,988 mt, +5 percent) and New Zealand (1,222 mt, +22 percent) offset smaller shipments from Argentina (10,489 mt, -19 percent) and a slight decline from Uruguay (8,580 mt, -1 percent).

EU beef/beef variety meat exports have increased this year, with the January-May total up 26 percent to 143,652 mt. European beef has fared well in Russia (although recently announced restrictions could take a toll on future exports) as one-fourth of the EU’s total export volume was destined for Russia (35,680 mt, +61 percent). Exports to Russia were mainly variety meat (18,754 mt, +87 percent), but exports of frozen muscle cuts (11,083 mt, +77 percent) were also sharply higher. Chilled muscle cut exports to Russia were down 2 percent to 5,633 mt. Exports to Hong Kong, which were primarily variety meat, nearly doubled from a year ago to 18,276 mt.

The European Commission’s complete short-term outlook report is available online.

Trade data source: Global Trade Atlas