Pig prices have hit near record highs, with the EU-spec’ SPP having climbed for the 20th consecutive week to 164.20p per deadweight kg – the second highest since the series began in April 2014, when values peaked at 164.22p at the end of May.
This is 0.34p up on the previous week and more than 36p higher than at the equivalent time in 2016. 
Estimated slaughterings also recorded a small gain on the week of 1% in the week ending July 15, but remain well below (-7%) year earlier levels at 158,600 head. 
European pork prices have also risen to their highest level since 2013 as supply tightens while demand continues to climb. 
According to research from Rabobank, pork processors in the EU have been buoyed by the emergence of new dynamics in the global pork trade which include the recently announced trade pact with Japan, as well as the developments surrounding the US’s decision to renegotiate NAFTA and KORUS.
The Economic Partnership Agreement between the EU and Japan, agreed in principle at the start of the month, offers Europe’s pork industry a significant opportunity to increase exports to the country over the coming years. Key benefits to EU exporters will include the 4.3% duty for high value pork cuts phased out, and a 5-10% reduction in tariffs which provides a welcome boost when the decline of exports to China and Hong Kong, are down 15% on the year as the current high prices in Europe make the market less competitive.
However, while Rabobank expects prices to reach their peak during Q3 2017 (12% up year-on-year), it also anticipates that sales will soften towards the end of the year.
It also expects a decline in production for the full year, reflecting the reduction in the herd recorded during 2016.
Justin Sherrard, global strategist in animal protein at Rabobank, said: “Supply chain stability and product assurance have again seen Europe’s pork industry remain stable where some others have faltered.
“Japan is the second largest destination for EU pork exports, so the agreement of the partnership should spell more good news for suppliers. 
“Exports to the country have grown steadily in recent years, and in the face of Russia’s announcement of further sanctions, will be welcomed by the industry.”
Europe’s producers will be worried about the slowdown in its pork sales to China, its largest market, as the share in its total exports declined from 72% in the first five months of 2016 to 65% in 2017.
Russia was also a key export market for European pork until sanctions were imposed in 2014 following biosecurity issues in eastern Europe, which were subsequently compounded by trade restrictions following the annexation of Crimea. 
Notably, Russia has announced that sanctions will remain for at least another year.
However, while global pig meat production is expected to increase in line with demand over the next decade, the meat, which is traditionally the most consumed animal protein in the world, is set to be overtaken by poultry meat.
Between 2016 and 2026, global pig meat production is forecast to increase by 10% to 127.5m tonnes (cwe), according to the OEDC-FAO Agricultural Outlook, with the main driver behind this being China.
On the other hand, EU production is expected to post a slight decline (-1%) from the 2016 level, as the domestic market saturates.
Global pig meat trade spiked in 2016, driven by strong Chinese demand as domestic production fell. However, following the anticipated recovery in production, Chinese import demand is expected to fall back 43% between 2016 and 2026. 
While this is expected to drive an overall decline in global pig meat exports up to 2020, volumes are anticipated to recover in the latter half of the decade with growing demand from developing nations, such as Vietnam, South Korea and Mexico.
According to the latest outlook, pig meat consumption is set to be overtaken by poultry meat in 2017, with the popularity of poultry meat expected to rise further over the next decade, due to its relative affordability compared to other red meats. 
Global consumption of poultry meat is set to climb by 13% between 2016 and 2026, with per capita consumption expected to grow by 2.5% over the same time frame. 
On the other hand, while total pig meat consumption is expected to grow 9% over the decade, per capita consumption is actually set to decline by 1% between 2016 and 2026.