African swine fever remains the biggest change driver in global animal protein, says Rabobank

26-Nov-2020 - Last updated on 26-Nov-2020 at 12:14 GMT

The Dutch agribusiness bank's outlook for animal protein markets globally sees pork production returning to growth in 2021, but the analysts say it will be a gradual recovery process, as African swine fever (ASF) is still active.

Many other issues affecting global animal protein mean that uncertainty will remain into 2021. These include managing higher feed prices and governments’ increasing engagement on animal protein, they note.

“The recovery from COVID-19 presents opportunities and risks for global animal protein. Major issues include the foodservice recovery, labor availability and costs, supply chain transformations, and food safety. Global animal protein trade continues to create areas of opportunity and risk as we head into 2021. China is the biggest of many areas of uncertainty in global trade.”

Geographic breakdown

In its outlook for North America, Rabobank expects production for all species to change only marginally in 2021. “Growth will be strongest for beef, based on post COVID-19 adjustments.”

All species will depend on strength in export flows in order to balance domestic demand, said the analysts.

Production growth is expected for all species in Brazil next year, but this will be more modest than in recent years, said the team. “Exports will drive production, given soft domestic demand.”

Looking at the prospects for the animal protein market in European, Rabobank expects the poultry industry to return to growth, on foodservice recovery. “[European] pork and beef production are expected to decline, on soft confidence.”

The initial recovery from ASF dominates the pork outlook in China, with growth expected in 2021. The Chinese poultry industry will have another strong year, but the beef sector will only see a marginal boost, forecast the Rabobank team.

In terms of developments forecast for the Southeast Asia region, the animal protein market specialists predict that poultry production in those countries will recover from a tough year.

“Pork will recover in Vietnam but remain constrained in the Philippines.”

Beef production and consumption in that region will see a rebound after a challenging 2020 for that sector.

Tight livestock inventories in Australia will support prices and constrain production, said the analysts. New Zealand’s production outlook is familiar - a slight rise in beef and slight fall in sheep meat.

Commodity prices

Meanwhile, the perspective of another Dutch bank, ABN AMRO, sees the US elections, China’s economic recovery and the hopes around COVID-19 vaccines sparking renewed optimism amongst investors.

"Most commodity prices have moved up over the past weeks, mainly because of these developments."

ABN AMRO expects emergency-use vaccines to be rolled out to the vulnerable in the coming months, which should allow a significant lifting of restrictions during the course of next year. Subsequently the vaccines will be rolled out more broadly allowing a full return to normal in 2022.

"This will trigger rapid economic growth in the US and eurozone from Q2 of next year onwards. China’s economic recovery will continue to strengthen and broaden. The positive economic trend in China will continue to underpin sentiment in many commodity markets. During 2021, prices will also find support from the trend in the US dollar. A weaker US dollar during 2021 makes commodities cheaper for non-dollar holders and supports prices."