Market outlook: Poultry is the winner

2022 has turned out to be an exceptionally bad year for pork production in Germany. Up to and including August, slaughter numbers were 9 % below the previous year, which corresponded to a decline of around 3 million pigs. At the beginning of October, the gap in weekly slaughter numbers compared to the previous year was still a good 7 %. In contrast, the number of poultry slaughtered increased by about 2 % by the end of August. Consumers are therefore increasingly switching from pork steak to chicken breast as a cheaper alternative.

This pattern is currently evident not only in Germany or the EU, but all over the world. This will not change in the coming months until well after the turn of the year. At least that is what the EU Commission and the US Department of Agriculture (USDA) assume in their current outlooks for the new year.

Brussels expects the volume of pork in the community of states to fall by 1.2 million tonnes in 2022. Germany, the second largest producer country, will account for about half of the expected 5 % decline. However, pork production in Poland, Belgium and Italy will also shrink by 2 to 3 %. Growth, although to a much lesser extent than in the past years, is only expected for the pork industry in Spain.

For 2023, the EU Commission assumes a further decline for the member states, which will be rather moderate at around 1 %. Continuing high costs for feed and energy as well as the consequences of African swine fever (ASF) stand in the way of growth. The high production costs keep profitability under pressure and make the sector increasingly unattractive.

For 2022, it looks like the EU will see a decline of almost 2 % in this regard. Converted per capita, this amounts to 32 kg which is 3.5 kg less than 20 years ago. This does not include the demand effect of the approximately 4 million Ukrainians who fled the war in their home country to the EU by mid-October.

Domestic consumption is expected to remain stable in 2023. In terms of exports, the declining demand of China, the largest buyer, is making itself felt. Some of the released volumes can be redirected to other countries (mainly Japan, the Philippines, the USA, Australia and the UK). Nevertheless, the bottom line for EU exports in 2022 is a shortfall of about 800,000 t, to which a few more 100,000 t are to be added in 2023. At 3.8 million tonnes, EU pork exports will then be close to the level of before the outbreak of ASF in China, which brought the EU third-country business the record years 2019 to 2021.