Navigating cost pressures and trade uncertainty: Rabobank Q2 2026 summary

• Higher fertiliser, fuel, feed and freight costs from the Middle East conflict are expected to impact supply chain margins
• Despite these challenges production is increasing in key exporting markets, notably Brazil, the United States and Canada
• Pig prices in China have dropped to their lowest level since 2010, due to ample domestic supply, although there may be opportunities for exporters to Japan, Vietnam and The Philippines

Direct impacts from the Middle East conflict on the global pork industry are expected to be limited, reflecting the region's relatively low levels of pork production and consumption. However, Rabobank suggests that indirect, downstream effects could still influence the global pork market.

Disruption risks in the Strait of Hormuz have raised concerns over higher fertiliser, fuel, and feed costs. Freight rates have increased on certain routes, adding margin pressure for packers and producers, while rising inflation could dampen consumer demand, particularly for premium pork products. Overall, the industry remains cautious, though not yet in panic mode.

Disease remains a persistent challenge across multiple regions. African Swine Fever (ASF), alongside other diseases such as foot-and-mouth disease and Porcine reproductive and respiratory syndrome virus (PRRSv), continues to disrupt production and increase costs. While progress has been made in disease control and monitoring, herd rebuilding remains slow in many areas due to financial constraints.

The EU sow herd grew 0.6% year on year (YoY) in 2025. The combination of a larger herd, improved productivity, and ASF related export restrictions has created an oversupply across the region. EU-27+UK pig production slipped 2% YoY in January 2026, while ASF case numbers in Spain have climbed to 238, a situation that continues to evolve.

Prices staged a modest seasonal recovery but remain below prior year levels. On the export front, reduced Chinese demand and increased competition from Brazil have weighed on performance, with shipments to China, Japan, and the Philippines falling sharply. The picture varies across the supply chain with sow farmers beginning to see margin improvement due to higher piglet prices, while finishers face negative margins.

The US continued its contraction in the sow herd, down 1.5% YoY, with the industry relying on productivity gains including a 2.1% YoY increase in pigs per litter to sustain output. Rabobank projects US pork production to rise 1.1% in 2026.

Pork prices held steady, helped by limited beef availability and healthy demand at retail. For 2026, Rabobank expects limited supply growth and retail demand to be solid.

On the export side, shipments through February were up 1.7% YoY, with Japan and Mexico among the key growth markets. However, the Mexican antidumping investigation and the upcoming USMCA renewal in July represent meaningful risks heading into the second half of the year.

Mexico's hog production has increased significantly in 2026, despite ongoing disease challenges. Growth has been driven by new and renovated farms, with Rabobank projecting a 5% growth in production YoY.

Many producers are currently operating at or below breakeven, though Rabobank expects a modest recovery as supply and demand rebalance in the coming months.

Pork import volumes rose 4.4% YoY through February. On the export side, Mexico's volumes rose approximately 9% YoY the same period, supported by stronger Japanese demand.

Canadian pork production got off to a strong start in 2026, with Q1 slaughter up 2.9% YoY and total production rising 3.4%, driven by productivity gains and additional slaughter capacity. Rabobank forecasts 2% production growth for the full year.

Despite the strong domestic performance, exports have struggled. Year to date export volumes is down 16.5% YoY. Brazilian competition continues to displace Canadian product in key Asian markets. Canadian pork imports were up by 1.1% YoY in Q1 2026.

Live hog prices fell to their lowest level since June 2010 in March 2026, due to ample domestic supply. Prices are now below producers breakeven prompting state reserve purchases to balance supply and demand.

Prices have been pressured by a combination of productivity driven production growth, accelerated slaughter following government herd reduction directives, and seasonally soft demand.

The government has issued further guidance to reduce the sow herd to 36.5 million head, down from 39.6 million at the end of 2025. Imports declined 19% YoY in early 2026, with EU shipments hit by antidumping duties and volumes from Brazil and the US falling sharply. Rabobank forecasts total production in 2026 to fall while prices to stabilize later in the year.

The suspension of Spanish pork imports in late November 2025 is set to create a growing supply gap in Japan. While inventories of pre-suspension shipments cushioned the initial impact, stocks are expected to deplete by Q2 2026, with Brazil well positioned to gain share as an alternative supplier.

Domestic production held steady in Q4 2025, but the outlook is increasingly challenging. ASF outbreaks have been reported across several territories, rising labour, feed, and fuel costs, and the lagged supply impact of heat related conception failures last summer are all expected to weigh on producers through Q2 2026 and beyond.

In Vietnam, pork prices have softened from their December 2025 peak but remain elevated, reflecting ongoing supply constraints as the industry continues to rebuild post-ASF. Large-scale farms are aggressively expanding capacity, though profitability is expected to face increasing pressure from higher feed and input costs through 2026.

In the Philippines, farmgate prices have eased from mid-2025 highs, but inflationary pressures are mounting. Pork imports rose 31% YoY in the first two months of 2026, with Brazil now accounting for 52% of total import volumes, up from 40% a year earlier.

Brazil's pork sector delivered a record Q1 2026, with export volumes reaching 381,000 tonnes, up 17%YoY. The Philippines and Japan were the primary growth drivers, with volumes surging 81% and 60% respectively, reflecting supply gaps in both markets stemming from ASF.

Domestically, live hog prices came under pressure in early 2026, falling 19% YoY in March amid an overlap of hog and chicken oversupply. A 10% decline in feed costs has helped cushion margins, keeping profitability in positive territory. Rabobank expects the world cup to help rebalance supply and demand, while also supporting prices and providing better margins through Q2 2026.

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