24 November 2021

2 minute read

While markets are expected to settle after the market disruptions of 2021, many drivers of recent change will remain. Animal protein company leaders will need to find and pursue opportunities in the relatively challenging market context, said Rabobank.

Drivers of change include the rising cost of inputs, particularly animal feed, labor, energy and freight. These drivers are likely to be confounded by further challenges, including the transition to more sustainable animal protein production, biosecurity challenges and the ongoing health crisis.

Rabobank expects animal protein prices to remain firm in 2022, with some exceptions. Prices will be supported by ongoing supply constraints and general strength in demand.

“We expect leaders of progressive animal protein companies to focus on the opportunities created by the ongoing market disruptions, rather than only seeing the multiple changes as business risks,” said Justin Sherrard, Global Strategist, Animal Protein.

The overall trend for 2022 is for continued but slowing production growth, driven by pork, poultry and aquaculture.

Rabobank expects the growth trend in these groups in recent years to continue, although pork will expand more slowly.

Beef and wild catch are both expected to contract slightly. The ongoing recovery of China’s pig herd will be the largest single driver of growth in global markets in 2022.

In North America, ongoing strength of demand will support production and prices. Production constraints could yet spoil what is shaping up as a positive year, the report said.

In Europe, pork production is stabilising, and domestic consumption needs to rise to balance markets. Poultry should improve on opening of all channels, despite higher costs.

Pork production recovery in China is expected to continue, but the path is uncertain. Consumption is soft and prices remain low. Beef demand will stay firm, said the report, while poultry is pressured by pork recovery.

In Brazil, exports are expected to drive production growth, although domestic demand is also supportive. Cost of feed will gradually improve, as will FX rates.

In Southeast Asia, poultry production is expected to recover after two challenging years. Pork will also recover from impacts of ASF and Covid-19, but more slowly.

In Australia, beef and sheepmeat supply is set to slowly improve. Ongoing demand for New Zealand exports, and tight supply, are positive for returns.

Alternative protein will continue its trend of rapid growth with more product diversification expected. Alternative protein product sales were well supported during 2021. Rabobank expects sales to keep growing strongly in 2022.