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Improving But Fragile Outlook for EU Meat Industry

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Improving But Fragile Outlook for EU Meat Industry

Improving But Fragile Outlook for EU Meat Industry
January 03
12:18 2012

The outlook for the EU meat industry in 2012 will be positive for most players, although significant differences exist between the sectors and the various positions along the value chain, according to Rabobank. Supply discipline will be the key success factor for the EU meat industry’s performance.

In the beef sector, farmers are best positioned to benefit from the tight market situation. Processors will need to fight for limited supply, which could affect their margin positions.

In the pork sector, farmers may see margins improve as supply reductions start paying off. Processing overcapacity will further sharpen competition for sufficient animals for slaughter and meat for further processing, which could keep margins relatively low.

In the vertically integrated poultry sector, margins are expected to improve slightly for farmers and processors alike.

However, Rabobank cautions that current market conditions are fragile: feed prices, the economy, export markets and exchange rates could easily shift in 2012, posing significant risk to the industry’s margins at both the primary and processing levels.

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