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Pork Quarterly Q3 2021: Looking for Growth Amid Uncertainties
Great volatility in Chinese hog and pork prices is rippling through the global market. China’s slaughter rates were unexpectedly high in Q2, pushing pork production up 35.9% YOY in 1H, according to official data. The sudden supply increase resulted in a sharp price decline and negative results in both farming and trading in 1H, pointing to low pork imports into China in Q3. While we expect hog and pork prices to rebound in Q3, the estimated high frozen pork inventory will impose a lot of downward pressure on prices. We expect the slowdown of imports in the coming months will reduce full year imports from 2020’s record levels by 10% to 20%. This will lead to a redistribution of pork trade in the global market and could place downward pressure on pork prices in exporting regions.
US Food Retail: Where Did Consumers Go During Covid-19?
While the fact that food retailers have benefited enormously from stay-at-home orders and restaurant closures is hardly news, a deeper look into credit/debit card transactions reveals their different impacts across food retail categories in both brick-and-mortar and online environments. We translated these data points into six learnings from the most eventful year in the food industry in generations, as well as into insights as to how players can sustain the momentum in a post-Covid economy.
- Online is the big winner, but summer may bring a temporary halt. Recent data indicates a likely temporary halt to this expansion in Q2 2021, as cases...
Poultry Quarterly Q3 2021: Improving Local Industry Performance, Shifting Trade Flows
The outlook for the global poultry industry continues to improve. This is mainly driven by the reopening of economies as vaccination levels accelerate in developed countries and increase in emerging markets. This will help the recovery of global, regional, and especially foodservice demand, which, on average, makes up one-third of global poultry demand. As supply usually responds slowly to such increases, significant price inflation in 2H 2021 is possible, especially as feed prices remain high and avian influenza has disrupted...
Greenhouse Gas Emissions in Beef Supply Chains: Opportunities for Reductions and Leadership
Beef supply chains account for about 6% of global greenhouse gas (GHG) emissions, of which about half are accounted for by the beef production stage of the supply chain. New and emerging technologies and management practices, covering feed production, cattle breeding, cattle feeding, and soil and pasture management, all offer significant opportunities to reduce emissions. Reduction of global beef supply chain emissions can be also achieved by transferring best practices from the most efficient beef supply chains to less efficient ones.
Food and agribusiness (F&A) company commitments to lower the supply chain GHG emissions of beef and other animal proteins are on the rise. Rabobank believes that in most regions these initiatives are likely to...
Beef Quarterly Q2 2021: Record Prices, but Will They Last?
Many key beef production and consumption areas across the world are currently experiencing high or record prices for beef or cattle. We explore what is driving this and whether it will last. There are also several other issues affecting global beef markets at present.
The rollout of vaccines, the transition to robust economic growth, and the advance of the northern hemisphere summer see many areas experiencing lower Covid case numbers and higher economic activity. With restrictions being eased, foodservice sales are also...
Pork Quarterly Q2 2021: Production Setbacks Slow Growth, Boosting Prices and Returns
Global hog prices are sharply higher in most markets, as processors scramble to find adequate supplies. Higher disease losses in key growing regions, along with the lagged impact of industry liquidation during the pandemic, have limited available hog supplies. Rabobank expects a gradual recovery in the herd, yet higher raising costs and demand uncertainty are expected to moderate the pace of growth. Lower production expectations have left the market short of pork, just as demand is beginning to strengthen. The imbalance is driving pork prices sharply higher in many markets, which is slowly being passed through to consumers, contributing to overall inflationary trends.
China: Herd losses due to new ASF outbreaks and health challenges are slowing the recovery. While below earlier expectations, the sow herd is flat vs. 2020 and will expand through year-end as...
Australian Beef Seasonal Outlook: Green Grass and Empty Pens
With breeding cattle inventory recovering from the lowest levels in over 30 years, there’s a unique opportunity to assess and then act on the future for the Australian beef industry. A number of challenges currently confront the Australian beef industry, including high cattle prices, low supplies, and China trade access. Australia’s position in the global protein world needs to be considered in rebuilding the herd.
Is Australia to be a supplier to high-quality niche markets, commodity supplier (of lean beef) to global trade, exporter of live cattle, or exporter of value-added beef to trade markets? “Any or all of these options may apply, but choosing one sets a path for the future. Decisions taken this year are not just about...
US Foodservice: Expect an Even Bigger Lift From the Third Stimulus
Checks under the USD 1.9 trillion American Rescue Plan, the third and largest stimulus package since the pandemic outbreak, began rolling out mid-March. The US government expects nearly 85% of all US residents – adults, children, seniors – to receive direct payments of up to USD 1,400 based on household income. The ongoing stimulus is substantially higher than the last two in April and December 2020, which included direct payments of USD 1,200 (plus USD 500 per child) and USD 600 (plus USD 600 per child), respectively.
Recipients Spent 10% to 15% More in Restaurants Following the Last Two Rounds of Stimulus
Credit/debit card transaction data from Earnest Research, a data analytics firm that tracks the US consumer economy through foot traffic, credit/debit card spend, retail pricing, and healthcare data, shows...
Poultry Quarterly Q2 2021: The Bumpy Road to Recovery
The outlook for the global poultry industry is gradually improving, but big differences remain between countries, and global poultry trade is still very competitive. The industry is facing major challenges due to Covid-19-related market disruption, very high and volatile feed prices, avian influenza (AI) in the northern hemisphere, and volatility coming from a bumpy recovery in countries affected by African swine fever (ASF). Key for producers will be to have a very disciplined supply growth, a focus on cost reduction via procurement, production efficiency, and feed formulation, as well as being prepared for big swings in demand driven by Covid-19-related government decisions.
As countries reopen foodservice, and while their control of Covid-19 improves, the poultry industry will start to recover. On average, 35% of global poultry consumption is via foodservice. “In countries where several of these disruptive factors come together, broiler prices have risen to high levels. Some governments have started to...
African Swine Fever: A Global Update – Ongoing Change in Global Pork Markets in 2021
African swine fever is actively influencing pork markets around the world, creating many areas of uncertainty – mainly in China, but also in Germany – which will not be resolved quickly. The implications of ASF for world pork trade are a major swing factor in global pork markets.
ASF influence on pork markets: China is the most obvious country where ASF continues to have a major influence. Its spread over winter highlights the challenges of managing this disease, and it has complicated the picture of China’s pork supply and demand. The ongoing pressure from ASF’s spread in Germany is also...
What’s on the Menu: Global Foodservice Outlook
In many countries, including those in Europe and North America, Covid-19-related disruptions remain the most relevant driver of foodservice performance in the near term, as sales and foot traffic trends remain well-below pre-Covid levels. Notably, China, which is ahead of the curve in terms of both virus outbreak and containment, could be a potential indicator of the likely speed and scope of the foodservice recovery as the virus subsides.
As vaccinations and treatment advance, the focus of attention will shift from near-term recovery to more strategic matters. The most relevant performance drivers over the next 6 to 12 months will be...
Food Price Surge is Unlikely to Revert
Agricultural commodity prices have surged almost 50% since mid-2020, causing concerns over food price inflation around the world and sometimes resulting in increased export taxes and quotas by producers at a time when importing countries want to import more.
Rabobank can identify four major factors driving the surge across agri commodities that will remain active in 2021: 1) US dollar weakness: Rabobank forecasts the US dollar to remain soft through 2021 (US dollar index -7% lower since mid-2020), but no further weakness is expected. 2) Weather: La Niña could extend into the US spring planting season. 3) Global demand: Good global demand (either for animal feed or storage) to continue through...
US Pork Supply Chain Locked in Limbo as Producers Await Legal Ruling
The US pork supply chain faces significant disruption in 2022, when California’s animal welfare regulations (Proposition 12) take effect. With less than 4% of US sow housing currently able to meet the new standard, Rabobank expects a shortfall in compliant pork to bifurcate the US market, leaving California with a severe pork deficit (and high prices), while generating a surplus in the rest of the US market.
“Producers are reluctant to make the costly investments needed to comply with the new regulation, unless compensated with long-term premium guarantees. Packer processors and end users are unwilling to enter into long-term supply arrangements, given outstanding legal challenges to the California rule and...
Beef Quarterly Q1 2021: New Drivers in Cattle Innovation
Increasing awareness of the need to improve environmental and social outcomes, together with a growing appetite from investors in animal protein, are creating new opportunities and growth in cattle innovation.
“We believe that research and innovation in the beef industry will continue to evolve but we are currently enabled by two main catalysts that will stimulate this further. Firstly, new investors in the space and secondly, the sustainability drive that not only seeks production improvements but also creates...
COVID-19 Disruptions Create New Areas of Opportunity and Risk for the Poultry Industry
Covid-19 is disrupting the business in ways the global poultry market had never planned for, creating new areas of opportunity and risk. The impacts of Covid-19 are spread very unevenly between regions and between companies.
“Company leaders and investors need to constantly review market conditions and adjust company positioning to optimize growth and returns. There will be bigger differences between winners and losers, which will lead to a process of accelerated capital investments, consolidation, and internationalization in the coming years,” according to Nan-Dirk Mulder, Senior Analyst – Animal Protein.
Rabobank has identified three stages of Covid-19’s impact on the global poultry industry...
US Beef Demand: The Risk of Recovery
The optimistic anticipation of a post-pandemic world continues to intensify with the ongoing distribution of Covid-19 vaccines. From a beef industry perspective, virus control will relieve much of the current strain on the processing and distribution sectors.
Throughout the next several years, innovations accelerated by Covid-19 will go live, as well as technological advancements across the supply chain. Simultaneously, tighter cattle supplies from a declining beef cow herd will...
Pork Quarterly Q1 2021: Looking for Growth Amid Uncertainties
Rising disease pressures continue to challenge the global market. While African swine fever (ASF) continues to impact pork production in Asia and Europe, as well as global trade flows, Covid-19 keeps affecting the whole supply chain, from producers to consumers. However, demand is expected to rebound in most regions in 2021 due to economic recovery.
Global pork supply will grow in Asia and North and South America, but face more challenges in Europe. “While China continues to dominate global trade, China’s expected reduction in imports in 2021 will...
Poultry Quarterly Q1 2021: A Perfect Storm in 1H, Initial Recovery in 2H 2021
After the big disruption caused by Covid-19 in 2020, the poultry industry will face additional challenges in 2021, especially in 1H. Covid-19 will place ongoing pressure on foodservice and trade, and the consequent slow economic growth will lead to more price-driven market conditions. As market fundamentals appear challenging for 2021, the poultry industry should prepare for a tough year.
“Looking forward, we see four main challenges for the global poultry industry: ongoing Covid-19 impacts on markets, high and volatile feed prices, China’s African swine fever recovery, and...
Changed Beef Consumption Habits Following COVID-19 Create Opportunities
The global Covid-19 pandemic and African swine fever (ASF) have changed beef consumption patterns through 2020. While total beef consumption has not seen too much change, we have seen distribution channels change, benefiting some at the expense of others. As the impacts of ASF are overcome and disruptions from Covid-19 subside, old distribution channels will recover.
“It is likely that many consumers will revert to their previous habits, but we do see opportunities for...
Rabobank Global Animal Protein Outlook 2021: Emerging From a World of Uncertainty
After a year full of uncertainties, global animal protein is expected to rise again, as it looks for opportunities.
In 2021, Rabobank anticipates production growth in most regions, with the biggest change taking place in Asia, where the impacts of African swine fever (ASF) are fading. Pork is expected to lead that growth – with a gradual recovery process, as ASF is still active. Poultry and aquaculture are also forecast to grow, followed by beef. Wild-catch seafood, however, is expected to decline.
Global animal protein trade continues to create areas of opportunity and risk, with China...
Consumers Likely to Continue Increased Usage of Takeout and Delivery
With indoor dining restaurant traffic significantly curtailed due to COVID-19 restrictions and concerns, the availability of takeout and delivery options became more important for consumers and restaurants. Many foodservice operators began offering these options recently, and consumers have increased their usage of takeout and delivery.
According to the National Restaurant Association, the uptick in takeout and delivery frequency was visible across each of the three major dayparts in recent months. The Association reported that 66% of consumers said they ordered takeout or delivery for dinner last week. That is up from 58% during the last week of February.
The trend was similar for lunch. About 47% of consumers ordered takeout or delivery for lunch last week, a level that has...
Rabobank: The Rise of Food Delivery Platforms
The fast rise of food delivery has created a new powerful middle man in the form of delivery platforms, which are increasingly becoming a force to be reckoned with. Even though the sector has expanded very quickly, most platforms have been losing money for years.
“The business model of delivery platforms has sparked discussion and criticism. Many delivery aggregators are struggling to make profits, with most of them losing money every year,” according to Marjolein Hanssen, Analyst – Consumer Foods.
“On the one hand, investors push them to start making these profits, while on the other hand, food delivery platforms are pressured to...
Getting Granular with Plant-Based Meat Substitutes: Opportunities for Grains, Oilseeds, and Pulses
Plant-based meat substitutes are a rapidly growing segment in an established and large consumer food market, attracting significant investments and consumer acceptance in recent years. Rabobank assesses the potential implications for the grains, oilseeds, and pulses sectors in different regions.
The focus of plant-based meat substitute producers to date has largely been on developing new products using existing ingredient bases and making use of established supply chains. “As consumer preferences start...
Rabobank’s Food and Agri Innovation Fund Invests in Chickpea Protein Foodtech Company InnovoPro
InnovoPro, the plant-based ingredients innovator specialising in innovative chickpea proteins, has secured $18m from investors including Rabobank as part of a second funding round.
The Rabo Food & Agri Innovation Fund, part of Rabobank’s investment arm Rabo Corporate Investments, joined InnovoPro's B round funding as the global food ecosystem continues to evolve in response to the COVID-19 pandemic. The deal, which was led by Jerusalem Venture Partners (JVP), Israels leading VC fund and also included in its second closing ICOS Capital, collaborative venture capital firm...
Rabobank: Pork Quarterly Q4 2020: Export Concentration a Potential Long-Term Risk
Global pork demand rebounded following Covid-19 disruption in most geographies, yet supply remains constrained in many Asian markets. This imbalance continues to support strong export demand from the rest of the world, resulting in sharply higher pork values.
Globally, processors’ ability to respond also remains constrained by labor availability, which limits packer capacity and efficiency. In Europe, new African swine fever (ASF) outbreaks add further limitations. “Hog producers face a challenging outlook, given rising feed costs, weaker economic trends, and slower export growth as China...
Rabobank: Lack of Trade Deal Will Hit EU-UK Food and Agriculture Trade Hard
The absence of an EU-UK trade deal on January 1, 2021 would cause significant economic losses on both sides for companies active in food & agriculture supply chains. The British prime minister, Boris Johnson, warned the world to prepare for a hard Brexit scenario. We therefore urge companies in the food supply chain to be prepared for loss of export and import opportunities and for a future in which additional efforts and administrative costs will have to be made to continue any remaining cross-border trade.
The Hard Brexit Becoming Reality After All
As Rabobank wrote in January 2019 in the note “Consequences of a ‘Hard Brexit’ for Food & Agribusiness: EU Market Closes for UK, While UK Will See Food Price Inflation,” a hard Brexit would hit EU-UK trade in...
The Case for Capacity: Can the U.S. Beef Industry Expand Packing Capacity?
Rabobank’s analysis suggests that an additional 5,000 to 6,000 head daily beef packing capacity would help return US cattle supplies and packing capacity to an historical equilibrium without a sharp contraction in beef cow numbers, while still maintaining packer profitability.
Recent supply chain disruptions in beef packing and processing have amplified the discussion surrounding the need for and feasibility of US beef packing capacity expansion. Adding packing capacity would result in both a larger US beef industry over the long run and more balanced profitability throughout the supply chain. If the US can avoid...
Rabobank's Poultry Quarterly Q4 2020: The Challenge of Balancing Volatile Markets
Moving through Q4 2020 and into 2021, the global poultry industry will operate in a volatile market context, with pressure coming from foodservice and wholesale markets. Possible new waves of Covid-19 will add to the market ups and downs, and the impact of a deep economic crisis will make markets more price-driven.
“Over the whole year, we expect a slight increase in global poultry production, mostly as a result of poultry expansion in China and Vietnam, where African swine fever has reduced pork availability, and also from expansion in the US. The rest of the world will be...
China Declares War on Waste in Food Catering
Ongoing anti-food waste campaigns in China aim to reduce food loss in catering. Although China seems to have no immediate worries about food shortage, the coronavirus pandemic, the geopolitical turmoil, and the escalating trade tensions with leading exporters have the potential to restrict China’s access to edible oil and protein meals. China is highly dependent on these imports, often in the form of oilseeds, which are then domestically processed.
Based on Rabobank’s analysis, eliminating waste in food catering (including restaurants, group dining and food deliveries) could make up to 5% of the nation’s soybean imports (5m metric tons) and 6% of the palm oil imports (0.4m metric tons) unnecessary. In addition, 10m metric tons of feed grains, mostly corn, could also be ‘saved’ this way. As China’s corn is experiencing...
Storm Impacts U.S. Corn Market
A derecho wind storm swept across the US Midwest on August 10, affecting millions of cropland acres in Iowa and surrounding states. At the same time, the western part of Iowa experiences a drought. The storm caused and/or will cause significant local/regional price volatility, quality issues, and storage challenges for this year’s Iowa corn crop. Local and national impacts vary greatly due to large stocks and bumper corn crops in states bordering Iowa and beyond. The derecho and the ongoing drought have put a bottom in the market and point to higher corn prices than the USDA’s projections for the 2020/21 crop year.
Derecho Crosses the Entire US Corn Belt
On August 10, a derecho storm ripped across the Midwest, travelling 770 miles in 14 hours from South Dakota to Ohio. The worst damage was reported in Iowa, where the USDA reported that 57 counties, representing 14.0m acres, incurred...
Rabobank Beef Quaterly Q3 2020: New Faces Shaping Future UK Beef Imports
Once outside the European bloc, the UK is expected to become the fifth or sixth largest beef-importing country. Consumer acceptance and non-tariff barriers will play significant roles in determining which countries ultimately supply the UK beef market in the future.
Brexit trade talks between the UK and EU continue to progress. “While pure economic reasoning and geopolitics normally play strong roles in trade negotiations, we believe that, in the case of the UK, consumer acceptance and non-tariff barriers will be equally significant in determining...
A Look at Sustainability in Minerva Foods’ Operations
House of Representatives Delegation Pushes USDA to Support Small Meat, Poultry Processors
Restaurant Brands International Reports Second Quarter 2021 Results
Pork Quarterly Q3 2021: Looking for Growth Amid Uncertainties
McDonald's Reports Second Quarter 2021 Results
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