Animal feed, labor, energy and freight will all cost more.
“This next year has the potential to accelerate structural change as a result of escalating costs,” said Christine McCracken, senior animal protein analyst for Rabobank.
“Success will most likely go to the players that adapt to the changing business environment; embracing consumer preferences for sustainability and preparing for a surge in demand as economies continue to reopen and adjust following COVID-19-induced lockdowns.”
Rabobank expects global demand for beef to remain solid, improving demand for poultry and pork, and strong sales of alternative proteins.
“Although demand will be strong and support livestock prices, North American feed costs are expected to remain at high levels,” said Don Close, senior animal protein analyst. “Producers will need to be vigilant on finding opportunities to lock in profitable margins.”
According to the Rabobank outlook:
- The ongoing recovery of China's pig herd is expected to be the largest single driver of growth in global markets in 2022.
- Stronger cattle prices are expected, as the beef cow liquidation continues in the U.S. A modest contraction expected in beef production reflects herd cycles in major markets.
- U.S. chicken production will increase to support stronger exports and foodservice sales. Steady production growth momentum is expected in all regions.
- U.S. pork prices should start the year strong but then trail 2021's near-record levels as production increases and markets adjust to the implementation of the legislation governing sow housing.
- Food retailers and foodservice chains will increasingly focus on the theme of sustainability with consumers, investors and regulators.
