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Supply-driven global meat markets to pressure prices

China will continue to exert huge influence on global meat markets.

Consumers are set to benefit from downward pressure on global meat prices during 2017, according to a new report from the Rabobank Food & Agribusiness Research & Advisory group.

The report, “Prices Under Pressure in a Supply-Driven Market: Global Outlook for Animal Protein in 2017,” forecasted that while global meat consumption continues to rise, a supply-driven and more-competitive market will create challenges for producers, putting pressure on prices and margins.

Rabobank predicted that China will continue to exert a huge influence on global meat markets. The world’s most populous country increased pork imports to record levels in 2016 and Rabobank expects these import levels will remain constant next year. China’s beef and poultry imports are also expected to rise.

In the U.S., production is expected to continue growing, but consumers’ appetites are being tested as record levels are reached. The strong dollar and uncertainty over future trading relationships with China and Mexico create potential headwinds for American producers, Rabobank said. The U.S. is currently the world’s largest exporter of pork to China, excluding the European Union.

“In a market driven by supply, we expect prices to come under pressure next year – a boon to consumers but a clear challenge for producers and processors,’’ said Justin Sherrard, Rabobank’s global strategist of animal protein. “With rising demand, we forecast that China will maintain its 2016 record levels of pork imports next year and could increasingly seek something akin to ‘imports-plus,’ locking in supply as it targets food safety and security for its growing population.”

Meanwhile, Sherrard said U.S. producers head into 2017 grappling with the potential of changes to the country’s trade policy and further currency movements. “Indeed, with worldwide currency fluctuations depending on political machinations as well as central bank decisions, we are becoming accustomed to expecting the unexpected.”

Elsewhere, Rabobank predicted an increasingly complex production market, making it more challenging for producers to exploit opportunities. They may come under additional pressure to adapt their systems to mitigate threats including the focus on antibiotics use, the attention on livestock as a source of greenhouse gases and growing retailer competition. Rabobank highlights that this complexity is creating new growth opportunities for the producers and processors that read the market well and respond swiftly.

They are likely to respond by strengthening supply chains, coordinating inputs and increasing transparency to improve traceability in supply chains, the report noted.

“The onus is very much on producers to mitigate the concerns of consumers, particularly around animal health and welfare issues, by adapting their production models and supply chains. This is a challenge which will continue to be a major theme in 2017,” Sherrard said.

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