Those hoping that 2022 will bring calm after multiple market disruptions will likely be disappointed. Although markets are expected to settle somewhat in 2022, many drivers of recent change will remain. The stage is set for animal protein company leaders to find and pursue opportunities in this relatively challenging market context.
Global summary
Higher input costs for animal protein supply chains, including animal feed, labor, energy and freight, will be top-of-mind change drivers. These will be accompanied by ongoing change, driven by the transition to more sustainable animal protein, biosecurity challenges and Covid-19.
Against this backdrop, animal protein prices should remain firm in 2022 (with some exceptions), 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,” says Justin Sherrard, Global Strategist – Animal Protein.
The overall trend for 2022 is for continued but slowing production growth, driven by pork, poultry and aquaculture. We expect 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.
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Regional outlooks
These are our key points from the outlook for animal protein in 2022:
North America
Ongoing strength of demand will support production and prices. Production constraints could yet spoil what is shaping up as a positive year.
Europe
Pork production is stabilizing, and domestic consumption needs to rise to balance markets. Poultry should improve on opening of all channels, despite higher costs.
China
Pork production recovery is expected to continue, but the path is uncertain while consumption is soft and prices remain low. Beef demand will stay firm, while poultry is pressured by pork recovery.
Brazil
Exports are expected to drive production growth, although domestic demand is also supportive. Cost of feed will gradually improve, as will FX rates.
Southeast Asia
Poultry production is expected to recover after two years of challenging Covid-19 impacts. Pork will also recover from impacts of ASF and Covid-19, but more slowly.
Australia & New Zealand
In Australia, beef and sheepmeat supply is set to slowly improve. Ongoing demand for New Zealand exports, and tight supply, are positive for returns.
Seafood
Favorable outlook for supply and demand. Salmon enjoyed record demand growth in 2021, with more to come in 2022 with further upside in foodservice. After a stellar 2021 for shrimp, producers will be optimistic for 2022.
Alternative Protein
Ongoing rapid growth, with more product diversification expected. Alternative protein product sales were well supported during 2021, and we expect sales to keep growing strongly in 2022..
