W27: Pork Update

In W27 in the pork landscape, the Food and Agriculture Organization (FAO) reports that the average meat price index stood at 117.9 points in Jun-23, unchanged from May-23 but down 6.4% YoY. Global pork prices increased in Jun-23, driven by a limited supply that remains in the leading producing regions, primarily in the European Union (EU). The United States Department of Agriculture (USDA) indicates that the US pork cutout value increased by 6% WoW in W27, reaching the highest level since Sep-22. The June 29 Hogs and Pigs report showed slight changes in the US hog inventory compared to 2022, slightly surpassing trade expectations. US hog slaughter and pork production are expected to remain similar to the 2022 levels in the coming months, but a decline is anticipated later in 2023 and into 2024 due to a 4% decrease in farrowing intentions for Jun-23 to Nov-23. The USDA's Livestock Slaughter report revealed that total red meat and pork production in May-23 reached a record high, with a 2.4% YoY increase, driven by a 4.1% increase in pork production. According to the USDA's Cold Storage report, US frozen red meat stocks on May 31 were down 11% YoY, with pork stocks down 3.7%.

The Brazilian Association of Animal Protein (ABPA) reports that Brazilian pork exports from Jan-23 to Jun-23 reached 589.8 thousand mt, valued at USD 1.41 billion, up 15.6% in volume and 26.7% in value compared to the same period in 2022. Brazilian pork shipments were mainly destined for China at 214.4 thousand mt (+17.1%), and Hong Kong at 61.1 thousand mt (+21.6%). In Jun-23, Brazilian pork sales reached 108.6 thousand mt, valued at USD 264.3 million, up 16.1% in volume and 20.7% in value compared to the same period in 2022. The Center for Advanced Studies on Applied Economics (Cepea) indicates that during Jun-23, pig farmers in the interior of São Paulo in Brazil experienced the lowest first semester prices in the live pig commercialization. Prices started at USD 18.13/15kg arroba and saw slight corrections throughout the month, reaching USD 19.39/15kg arroba on the last trading day. However, the prices received were significantly lower compared to the same period in previous years. The average daily price evolution in Jun-23 was well below that of Jun-22 and the past three years, with a maximum increase of only 7% MoM. In contrast, historical data showed an average increase of 32.7% and 21% for the same period.

According to the Association of Swinemakers of Ukraine (ASU), pork prices in retail chains increased by an average of 1.7% (USD 0.09/kg) in Jun-23. Thus, chilled pork prices rose from USD 5.49/kg at the beginning of Jun-23 to USD 5.58/kg at the end of Jun-23, with the average indicator standing at USD 5.54/kg, up 1% MoM. The hip part saw the most noticeable price increase of 4.6% (USD 0.23/kg) to USD 5.20/kg. However, significant fluctuations in the prices of this cut in May-23 and Jun-23 reduced the gap between the average monthly marks to 1.3%. Lastly, the Ukrainian pig farmers association indicates that due to a surge in consumption and a supply shortage, the average pork price in slaughter weight in Ukraine has increased to USD 2.31/kg, rising by USD 0.34 in recent weeks. The demand for animals in slaughter conditions has been exceptional, leading meat processors to extend existing contracts. The price hike is attributed to the start of the barbecue season and the need for meat producers to stockpile raw meat due to limited import supply. Ukraine experienced a significant loss of pig population due to hostilities, resulting in a supply shortage of around 100 thousand mt of pork in 2022.