W23: Pork Update

In W23 in the pork landscape, the European Commission indicated that, in Jan-Feb 2023, EU pork exports totaled 760.82 thousand mt including processed products and by-products, down 15.3% compared to the same period in 2022. Due to higher pork prices, EU pork export revenue amounted to almost USD 2.23 billion, up 1.5% YoY. EU pork shipments to China totaled 221.38 thousand mt, valued at USD 535.22 million, down 8.5% in value. Despite the decrease, China remained the EU’s most significant importer, with a share of 29.1%. Other destinations with decreases were the UK (-1.6%), the Philippines, South Korea, and Australia. Destinations with increases in EU pork imports in the Jan-Feb period were Japan (+2.2%), Vietnam (40.1%), and Malaysia (+77.3%). In particular, the EU countries with decreases in pork exports were Spain (-14.3%), Denmark (-22.9), the Netherlands (-11.6), and Germany (-21.4%). Apart from Sicily, African Swine Fever (ASF) was initially confined to the northern regions of Piedmont, Liguria, Lazio, and Rome in the central part of Italy. In May-2023, ASF cases were also first reported in Calabria and Campania in southern Italy. Some of the restricted areas also extend to the Basilicata region. Since ASF first appeared on the Italian mainland in early 2022 until June 2, 2023, there have been 841 detected cases of wild boar and outbreaks in seven agricultural pig farms. According to data from ADIS, 527 wild boars in Italy tested positive for ASF in the first five months of 2023, behind Poland (1669), and Germany (639).

The USDA estimates 2023 US pork production at 27.376 billion lbs, 5 million lbs less than the May projection due to slow processing pace expectations, with an average barrow and gilt price of USD 56.70, up USD 20, lower consumption, and unchanged imports and exports. For 2024, the USDA left unchanged its US pork production and average price projections. In W22, Brazilian deals with live hogs continued to show low movement with slaughterhouses having little motivation to improve acquisitions. As a result, two new lows occurred at the beginning of W22, but there was stability in the price in the following days. The result was an average weekly price of USD 18.29 per arroba for live hogs, a drop of 8.3% WoW but an increase of 8.6% YoY. For the time being, just starting the month of June, the average price has reached just USD 18.17 per arroba, down 10.8% MoM and 10% YoY. ABPA reports that Brazilian pork exports (considering all products, between fresh and processed) in May-2023 totaled 101.7 thousand mt, valued at USD 251.4 million, up 13.9% YoY in volume and 23% YoY in value. In the Jan-May period, Brazilian pork shipments amounted to 481.1 thousand mt, worth USD 1.149 billion, an increase of 15.5% in volume and 28.2% in value compared to the same period in 2022. Brazilian pork shipments were mainly destined for China at 176.2 thousand mt (+20.8%), Hong Kong at 51.3 thousand mt (+21.1%), the Philippines at 38 thousand mt (+17.5%), Chile at 34.2 thousand mt (+69.6%), and Singapore at 29 thousand mt (+5.7%). Brazilian pork shipments were mainly sourced from the state of Santa Catarina with 261.6 thousand mt (+14.3%), Rio Grande do Sul with 110.8 thousand mt (+19 .8%), Paraná with 66.4 thousand mt (3.66%), Mato Grosso do Sul with 10.9 thousand mt (+70.8%), and Mato Grosso with 10.1 thousand mt (+ 93.9%).

The Argentine swine industry continues to show strong momentum, with uninterrupted growth in the last few years. In 2022, Argentine pig slaughter totaled 7.7 million, an increase of 2.5% YoY and the highest on record. Pork production in 2022 amounted to 723.38 thousand mt, up 4% YoY. Argentina more than doubled its pork production in the last decade and has increased it fivefold in the last 20 years. According to the USDA projections, in line with the production dynamics so far in 2023, Argentina is on track to break a record in 2023, with a potential pork production of 760 thousand mt. In the first four months of 2023, pig slaughter reached 2.56 million heads, with pork production reaching close to 240 thousand mt, a growth of 7% YoY and marking an all-time high for the Jan-Apr period of the year. In the last five years, Argentines have increased their per capita consumption of pork by 20%, an increase of nearly 3kg of pork per inhabitant per year. In April 2023, Argentine pork imports (entirely cut) totaled 1.8 thousand mt. Meanwhile, pork exports totaled 460 thousand mt, 25% of what was purchased, and were mainly by-products, which are cheaper. The Government allows the entry of meat that is produced in more than enough quantity in Argentina, attacking the prices of farmers who charge USD 1.50-1.54 per live kilo, with a cost that exceeds USD 1.62 for most customers.

Lastly, in the first four months of 2023, Mexico imported 753mt of Brazilian pork, an increase of 2,688.9% compared to the same period in 2022, when purchases had totaled only 27mt. According to the Grupo Consultor de Mercados Agrícolas (GCMA), although the percentage increase between both periods is significant, purchases from Brazil still represent a minimum volume compared to the total imports registered, as well as with respect to the main exporters. In the Jan-Apr period, Mexican pork imports totaled 483.17 thousand mt, up 1.4% compared to the same period in 2022. The main suppliers of pork to Mexico were the US with 416.35 thousand mt (+5.9%), Canada with 59.61 thousand mt (-22.7%), and Chile with 3.02 thousand mt (+20.8%). GCMA projects that by the end of 2023, Mexico must cover more than 40% of domestic pork consumption through imports, which is expected to end with 1.5 million mt, up 6% YoY.