2022 has brought about a highly volatile environment across commodities markets. Inflation, which began during the pandemic and was exacerbated by the Russian invasion of Ukraine, has sent agriculture markets soaring, says an article published in S&P Global.
Increase in rates
The prices of hogs, cattle, and poultry have all increased at a rate near or higher than their respective input costs. This has led to strong margins in the US and in most of the world. However, declining, and sometimes negative, margins are beginning to weigh on the livestock industry.
Global feed demand
Looking towards 2023, we expect a confluence of factors to reduce global livestock numbers. This is clear when examining each of the major livestock sectors.
Global Feed Demand is likely to fall in 2023
- The US cattle herd, the world’s largest grain-fed cattle herd, is in contraction.
- Hog herd is likely to contract in 2023 in the EU, US, and China.
- There were severe outbreaks of bird flu and HPAI in the EU and US, and poultry inventory is already down in these regions, further contraction is expected in 2023.
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Source: S&P Global