|Global Market Analysis|
MEAT AND MEAT PRODUCTS
The economic downturns triggered by the financial crisis in mid-2008 have had a severe impact on the meat sector in 2009, notwithstanding a decline in the prices of major feed ingredients. Accordingly, FAO has revised downwards its estimate of world meat production in 2009 to 282 million tonnes, which is marginally above the 2008 level. Global trade in meat was also very much affected by the deteriorating economic environment, and is now expected to drop by 6 percent, to 23.1 million tonnes, with all the meat markets likely to contract. Meat per caput consumption in 2009 is now estimated at below 41.7 kg, slightly down from 2008, with a small increase in Asia but falling intake in most of the other regions. Prospects for the meat sector in 2010 are brighter, as major economies are returning to a positive growth path. Improved producer returns are anticipated to boost global meat output to 286 million tonnes, with the shorter cycle pig and poultry sectors likely to respond the most to renewed demand, while reduced cattle inventories may constrain beef production in 2010. As import demand in all the various types of meat recovers, global meat trade is set to rebound by 2.5 percent to 23.7 million tonnes next year. Likewise, per caput meat consumption may rise slightly in 2010, consistent with improved income prospects.
Table 15. World meat markets at a glance
* Jan-Nov 2009
Falling consumer demand, poor pasture conditions and more difficult access to credit have seriously impaired the bovine meat sector in the commercially oriented producing countries in 2009. As a result, early prospects for stable world bovine meat production in 2009 are unlikely to materialize. Instead, production is forecast to contract for the second consecutive year to 64.4 million tonnes, largely on account of falling output in Australia, Brazil, China, the European Union, the Russian Federation, Ukraine and the United States.
Beef output in North America is anticipated to decline by 2.5 percent in 2009 to 13.1 million tonnes, reflecting a contraction in the United States. In the first half of 2009, placements in feedlots in the country were reported to have fallen to a ten-year low as feed prices remained high relative to meat. Although feedlot placements increased in the second half of 2009, the United States Department of Agriculture (USDA) still maintains its forecast of a 3 percent reduction of output. Canada beef production is anticipated to remain unchanged, at 1.3 million tonnes. Beef production in South America is expected to fall by almost 2 percent to 14.4 million tonnes. Most of the decline is likely to arise from a 3 percent expected contraction in Brazil, where the difficult financial situation of abattoirs, arising mainly from a fall of exports to the European Union and the Russian Federation, depressed slaughtering. In Argentina and Uruguay, low profitability and drought took a heavy toll on the beef sectors. Especially in Argentina, these conditions have prompted farmers to liquidate their herds, but because of poor animal conditions, overall production is foreseen to remain in the order of 3.1 million tonnes. In Uruguay, slaughter numbers were unchanged from 2008, but a relatively large share of the animals culled corresponded to cows and heifers. Lower carcass weights are expected to drive production down this year to 520 000 tonnes. In Colombia, production is anticipated to remain unchanged in 2009 at 900 000 tonnes after five years of expansion. In Oceania, aggregate beef production is provisionally estimated at 2.81 million tonnes, or a slight decrease. In Australia, abundant rains in September and October brought some relief after three consecutive years of drought, but came too late to compensate for the earlier damage. As a result, beef output is foreseen to contract by 2.5 percent. In New Zealand, poor pasture conditions and low milk returns induced slaughter and the liquidation of dairy herds, which limited the decline in beef output this year. In Europe, production for 2009 in the European Union is estimated at 7.9 million tonnes, which represents a drop by 1.1 percent as the sector was hit by the financial crisis. Low cattle prices and cash flow pressures are behind reduced carcass weights and slaughter numbers compared with 2008. In the Russian Federation, beef production is anticipated to decrease by 3 percent, despite an ongoing herd liquidation, which suggests that productivity deteriorated substantially this year. In Asia, bovine meat production is estimated to have fallen marginally in 2009 to 16 million tonnes, as declines in China were largely offset by moderate gains in India and Pakistan. In China, production is anticipated to fall by 6 percent, marking the third year of consecutive declines. On the other hand, in India output is foreseen to grow by some 5 percent. Cow beef is not consumed in India but production of buffalo meat, a by-product of the dairy industry, is set to expand only modestly in 2009 due to a less than satisfactory monsoon season. In Pakistan, however, output is expected to grow faster, at 5 percent following good weather and pasture conditions. In Africa, beef production is set to increase by 2 percent, reaching 4.86 million tonnes. In Western Africa, livestock has been affected by persistent dry conditions in several countries, notably in Chad, Mali and the Niger, where livestock deaths have been reported. In Eastern Africa, the scarcity of adequate pasture and water has caused major animals losses and worsened livestock conditions in the pastoral regions of Ethiopia, Kenya, the Sudan and the United Republic of Tanzania, with a detrimental impact on pastoralists' income and their ability to access staple foods. Reproduction rates of livestock have suffered from successive poor seasonal rains since 2007, making the recovery of agropastoral and pastoral livelihood systems more difficult and endangering long-term food security.
Despite brighter economic prospects in 2010, the bovine meat sector may be under pressure in 2010, with global production preliminary forecast to fall slightly to 64.0 million tonnes. Prospects are negative for both Canada and the United States, largely reflecting reduced cattle inventories. In South America, output in Argentina and Uruguay may be constrained by the cattle losses incurred in 2009. However, Brazil, where the herds have not been downscaled, looks in a good position to expand output. Production in Oceania is set to recover only partly in 2010, sustained by modest gains in Australia, while growth will be constrained in New Zealand, as farmers are expected to take advantage of the improved pastures to rebuild their herds. In the Russian Federation, the national beef herd in September 2009 was reportedly down 2.3 percent, which is anticipated to result in a one percent reduction in output next year. The outlook for Asia in 2010 points to another fall, reflecting expectations of a further contraction in China, as low returns are reported to discourage production, especially among lower scale farmers. On the other hand, growth in India and Pakistan are forecast to remain in the order of 5 percent.
World exports of bovine meat in 2009 have been revised downwards and are now foreseen to fall by 4.5 percent, to 6.7 million tonnes. Much of the decline in global exports reflects poor prospects in Brazil, the largest world supplier, where deliveries are provisionally estimated to drop by 14 percent, reflecting low world prices, a strong value of the Real, and until early 2009, slow demand in traditional markets including the European Union and the Russian Federation. Australian beef exports, totalling 1.27 million tonnes, also faced a difficult 2009 with lower demand from Japan and increased competition from Brazil and the United States. Beef exports from the United States in 2009 have been revised downwards and may drop by 8 percent, to 700 000 tonnes, as larger exports to Asian countries were more than offset by a sharp decline in sales to Mexico. By contrast, deliveries by Argentina are forecast to rise by almost 33 percent from the depressed 2008 level, largely reflecting the granting, by the Government, of larger export authorizations. Poor economic conditions are expected to severely curtail beef imports in 2009 in several of the major markets, in particular Egypt, Mexico, the Republic of Korea, the Russian Federation and Venezuela. Although part of the reductions might be compensated by increased deliveries to North America and Hong Kong SAR, they are unlikely to be sufficient to prevent world imports from falling.
The outlook for global bovine meat trade in 2010 is slightly more positive. Overall, world beef exports may rebound by 2 percent to 6.8 million tonnes, still short of the 7.0 million tonnes traded between 2006 and 2008. Indeed, trade next year is likely to be constrained by reduced export availability in several of the major supplying markets. Much of the increase is likely to rely on Brazil, where ample cattle numbers should allow farmers to respond positively to improved price conditions by increasing slaughtering and exports . Rebounding world import demand may also boost exports from Canada, Paraguay, the United States and Uruguay. By contrast, exports from Australia may fall further, constrained by lower production, as farmers traditionally rebuild their herds after drought. Reduced cattle inventories are forecast to also depress beef shipments from Argentina. As for world bovine meat imports, the global economic recovery is expected to lift consumer demand and imports in Canada, Mexico, the United States and Viet Nam. Purchases may also rebound in the Russian Federation.
International prices of bovine meat, expressed in United States Dollars, were depressed in 2009. They fell consistently in the latter half of 2008 and first quarter of early 2009. Since then, they somewhat stabilized at 18 percent lower levels than their average values in 2008. Despite the devaluation of the United States Dollar, export prices in Argentina fell half way through the year. The prices of bovine meat are anticipated to make some moderate gains in 2010, as supply may fall short of the increasing demand brought about by an improving world economy.
Global sheep meat production is anticipated to grow by 1.7 percent in 2009 to 13.4 million tonnes. Dry weather in recent years reduced flocks in key producing areas, including in Oceania, South America and parts of Africa. However, better weather conditions currently prevailing in all regions, coupled with strong lamb prices, are encouraging farmers to rebuild their flocks. In Africa, dry weather conditions in western and eastern parts of the region have affected herds and therefore pastoralists' incomes and livelihoods. Sheep and goat meat production is unlikely to expand by over 2 percent in 2010 due to restocking. Nevertheless, growth could be stronger in the Russian Federation where sheep inventories have increased by 3.5 percent.
Sheep meat trade in 2009 is forecast to be in the order of 900 000 tonnes, down 6 percent compared with 2008, but early prospects for 2010 point to some recovery. Sheep meat prices performed relatively well, in particular high quality lamb meat which saw prices climbing progressively through the earlier part of the year. World sheep meat prices were sustained mainly because of lower supplies from Australia and New Zealand, whose combined exports of 753 000 tonnes was down by 3 percent. In addition, import demand from Asia and the Near East, where lamb and mutton is a tradition, remain sustained. World prices in 2010 are expected to strengthen, due to a tight world supply situation following reduced flock numbers, especially in Oceania.
World pig meat production in 2009 is estimated to increase by almost 2 percent to 106.5 million tonnes, sustained mainly by growth in China, which accounts for 45 percent of total output. Production in the country is anticipated to grow by 5 percent to 49.7 million tonnes, slower than the 7 to 8 percent increases witnessed in recent years. Analysts believe that the sector has reached maturity and that production growth in the future will be more modest, at some 3.5 percent, and brought about mainly by productivity gains. Indeed, the sector is restructuring, as shown by the large investments in large plants in central, southwest and coastal areas of the country. On the animal health front, the Porcine Reproductive and Respiratory Syndrome (PRRS) is currently under control, although outbreaks cannot be ruled out because, once established, this disease is difficult to eradicate. Production is also expected to increase in Brazil and the Russian Federation, underpinned by higher herd numbers. However, prospects are mostly negative in the rest of the world, reflecting falling producer returns. Pigmeat output in the European Union, which accounts for 21 percent of world production, is set to decline by 3 percent, constrained by reduced animal inventories, brought about by high feed costs and stagnant product prices in 2008. In North America, production may also fall in the United States, while low financial returns in Canada may suppress output growth. In Mexico, where producer prices were depressed by the negative reaction of consumers to A-H1N1 outbreak, output contracted by one percent.
Pig meat production in 2010 is anticipated to increase by another 2 percent to 108.7 million tonnes. Output in China may grow by a moderate 3.6 percent, while, in the European Union, production may recover by 2 percent, sustained by lower feed prices. However, questions remain in the European Union about the impact on the pig meat sector of new legislation related to animal welfare. Production is also expected to grow in Brazil and the Russian Federation. In the United States, where analysts have warned about the negative effect that Country of Origin Labelling (COOL) may have on the import of live animals from Canada, the USDA anticipates a production decline of over 2 percent,
World pig meat trade in 2009 is expected to contract substantially to 5.5 million tonnes, a 10 percent fall from last year, driven by a severe deterioration in demand from major traditional importers. All of them are expected to reduce their purchases in 2009, with the exception of Mexico. China's imports, in particular, look set to decrease by 60 percent, on account of both higher availability of domestic produce and a slowing down of the economy. In the Russian Federation, the depreciation of the Rouble, the government import substitution strategy and sanitary import restrictions for non-heat treated pig meat are anticipated to depress imports by 7 percent to 800 000 tonnes. Imports are forecast to fall by 4.5 percent in Japan and by an even more pronounced decline of 5 percent in the Republic of Korea. By contrast, Mexico's imports of pig meat, which had collapsed in May following the outbreak of A-H1N1, recovered strongly in the second half of the year. They are currently estimated to grow 12 percent for the whole of 2009. On the supply side, the dip is likely to arise from lower exports from the European Union (-27 percent) and the United States (-11 percent), which together accounted in 2008 for over 60 percent of the world pig meat trade. On the other hand, exports from Brazil and China are anticipated to expand by 5 and 3 percent respectively, while those of Canada may stagnate. Global pig meat exports are expected to recover by 4 percent in 2010, sustained by increased exports from Brazil, the European Union and the United States. As for imports, the expansion is expected to be driven by larger deliveries to Hong Kong SAR, Mexico and the Republic of Korea.
International pig meat prices, which had gained 8 percent in 2008, fell only slightly in 2009. The drop could have been much stronger, save for a significant contraction of supplies in the European Union and the United States, which countered the depressing effects on import demand of a world economy in recession and the erosion of consumer confidence following outbreaks of A-H1N1.
The forecast for world poultry meat production in 2009 has been lowered and now stands at 91.9 million tonnes, marginally above the previous year. The downward revision reflects a poorer than first anticipated performances in Brazil and China. These, together with expectations of an unprecedented 4 percent fall in production of the United States, are expected to result in the virtual stagnation of world poultry production. Should these estimates hold true, this would be the first time aggregate poultry production did not show any growth since records have been kept. Output could also fall in Brazil, the world's leading exporter, for the first time in 15 years. Other large producing countries facing declines include Mexico, where the sector has been affected by the high cost of imported feed, and Pakistan, where over one-third of poultry farmers are reported to have scaled down production or closed down operation. By contrast, output is forecast to grow by a modest 2 percent in China to 15.4 million tonnes. An expansion is also foreseen in India, Indonesia, the Philippines and Thailand, where a more favourable feed to poultry price ratio contributed to easing the financial pressures of poultry farms. In Europe, production growth in the Russian Federation has been revised upwards and now stands at 12 percent. In the European Union, the sector is anticipated to increase by a mere one percent in 2009, as the poultry to feed price ratio deteriorated. In Africa, the poultry industry in Egypt is slowly beginning to stabilize after two years of decline following the discovery of Avian Influenza. Nonetheless, the country may face another 5 percent contraction in 2009. Output is also anticipated to fall in Morocco. The situation is more positive in Benin and Nigeria, which may witness some growth this year, as new broiler processing plants are being built. In South Africa, output is anticipated to remain largely unchanged.
Assuming no new disease outbreak, growth in the poultry production may rebound in 2010 to some 3 percent, under prospects of a global economy upturn and less expensive feeds. In the United States, production is expected to grow in 2010 by over one percent, provided feed prices do not surge. In the Russian Federation, the sector is foreseen to keep its momentum, with production rising by 10 percent to 2.8 million tonnes, underpinned by investments in new large poultry processing plants. In China, the outlook points to a 3 percent growth to 15.9 million tonnes, sustained by a more dynamic demand. Brazil growth is expected to resume a 4 percent expansion, but, in the European Union, production may stagnate.
The preliminary outlook for world poultry trade in 2009 is negative, as it is anticipated to drop by 4 percent to 9.8 million tonnes. The contraction in global poultry meat exports would be mostly on account of Brazil and the United States, the world's largest poultry suppliers, which together provide close to 70 percent of global trade. In Brazil, poultry deliveries were depressed by the imposition of export restrictions, the strength of the local currency, poor credit availability to exporters and a retrenching demand in key export markets. The only destination where Brazil exports saw growth was the Near East, partly because of a lowering of import tariffs by Saudi Arabia. In the United States, exports of poultry meat (which excludes chicken paws) are anticipated to decline by 7 percent, due to the combined effect of low world prices and reduced domestic supplies. Exports may also dip in the European Union, by close to 4 percent, while, in Thailand, they are expected to remain relatively unchanged. Much of the contraction in global imports is anticipated to result from a 26 percent cut of purchases by the Russian Federation, reflecting strong production gains and reduced import quotas. Shipments to some large importing countries also look set to decline, in particular to China, Japan, Ukraine and Venezuela. However, they may increase by 8 percent in Mexico, to compensate for the lower domestic availability of other meats.
The outlook for trade in 2010 is for a mild expansion of 2 percent. Shipments of Brazilian poultry have intensified since late 2009 and provided this trend continues, exports in 2010 could expand by 5 percent. However, shipments from the United States are expected to fall again, albeit by a more moderate 4 percent. Exports by the European Union may not grow either. However, under the prospects of a stable animal health situation, deliveries from Thailand may expand by 9 percent. On the import side, the outlook points to an expansion of deliveries to countries in Southeast Asia and the Near East, which would more than compensate for an anticipated decline in China, Japan and the Russian Federation. The Russian Federation is yet to define its new import quota for 2010. However, some press reports indicate that the quota may remain unchanged, which, along with the good production prospects, would point to a stagnation of imports.The outlook is also uncertain for Ukraine, where new rules on imports are expected to be applied in 2010. However, deliveries to Hong Kong SAR, Iraq, Kuwait and Saudi Arabia may rise. There is much uncertainty regarding the next year purchases by the European Union, as it is unclear whether the new legislation on animal welfare will also concern imported poultry.
International poultry prices strengthened for most of 2009 in the United States, in line with declining production. In Brazil, they showed signs of picking up during the second half of 2009, driven mainly by higher demand from countries in the Near East. World poultry prices in 2010 are not expected to depart much from current levels, as the 2 percent increase in supply may be enough to satisfy the expected mild recovery of global demand.
7. Trade refers only to meat and does not include the meat equivalent of traded live animals
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