W37: Pork Update

In W37 in the pork landscape, the Food and Agriculture Organization (FAO) indicates the meat price index reached 115 points at the end of Aug-23, an increase of 15% compared to the period from 2014 to 2016. FAO notes that pork experienced a 4% month-on-month (MoM) drop in Aug-23, the largest decline for the month on record. Despite this setback, Aug-23 pork prices remained 9% higher than in Aug-22. FAO attributes this situation to decreased demand from major importers, coupled with increased availability from European exporters due to subdued domestic sales.

The Center for Advanced Studies in Applied Economics (Cepea) reports a significant uptick in live pig and pork prices across most of the Brazilian markets at the start of Sep-23. Cepea attributes this pork price surge to several factors, including the usual uptick in demand at the beginning of each month, driven by salary payments, which bolsters consumers' purchasing power. The heightened demand for pork also led to an increased industry need for pigs at the optimal weight for slaughter, further increasing live pig prices. This price appreciation for both live hogs and pork reflects market adaptability to seasonal fluctuations and consumer preferences. The purchasing power boost at the start of each month stimulates pork consumption and benefits the entire production chain.

Brazilian pork exports to China reached 30 thousand metric tons (mt) in Aug-23, a 21.7% month-on-month (MoM) decline, a 38.9% year-on-year (YoY) drop, and the lowest level so far in 2023. This export volume accounted for just 27% of Brazil's total pork shipments, the lowest share in nearly four and a half years. However, Brazil’s pork exports to China increased by 4.6% in the first eight months of 2023 compared to the same period in 2022. This represents an average share of 36% of total exports, though slightly lower than the 38% share during the first eight months of 2022. Notably, 2023 Brazilian pork exports to the Chinese market represent a 27.3% volume decrease and a loss of nearly 17% in representation compared to 2021, when shipments to China accounted for 52.6%.

The Swine Farmers of Ukraine Association indicates that the livestock market continued trending upward in the second half of Sep-23. While the live pork price increase moderated marginally in W37 at 2.3% compared to the beginning of Sep-23, the overall price movement remained consistent. Most livestock lots in W37 fetched prices around USD 0.054 per kilogram (kg) higher than in W36, especially in the west, central, and south regions, where prices ranged from USD 2.27/kg to USD 2.33/kg. Live pork prices were slightly higher in the east region than in other locations. The weighted average price stabilized at USD 2.31/kg, reducing regional price disparities. Limited conditioned pork supplies and strong demand sustained this positive price trend.

Summer heat still affects animal weights in Ukraine, leading some producers to sell smaller lots or lighter animals. Consequently, high competition among suppliers, particularly in the chilled meat segment, exerted upward pressure on wholesale prices. As a result, most meat processing industry representatives anticipate a gradual balance between pork demand and supply, with purchase prices influenced by seasonal factors.

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