W25: Pork Update

In W25 in the pork landscape, the FAO expects 2023 global meat production to reach approximately 364 million mt, up by less than 0.5% YoY, with an annual gross addition of only 1.3 million mt. However, the global pork sector is expected to experience a reduction of around 0.5% YoY, primarily due to the impact of African swine fever (ASF) on EU production, tight profit margins, and weakened global demand. If the estimated volume is achieved, pork will account for 33.44% of the projected global meat production. In Q1-2023, EU pig production experienced a significant decline, reflecting a reduction of 1 million sows in Europe during 2021/22. Europe's hog slaughter in Q1-2023 stood at 57.1 million heads, down 4.7 million (-8%) compared to the same period in 2022. The decline in hog production was widespread, with Spain recording a 9% decline, Germany down 8%, and Denmark down 12%. This decline in supply has led to higher prices in 2023, with Spain's price increasing from USD 1.12/kg to USD 2.20/kg. The lower hog production in Europe is expected to result in a significant decrease in pork exports. Conversely, recent US pork exports appear to be about 20% higher YoY, and it is expected that the decline in EU production will lead to even greater US pork exports in the coming months. The ongoing liquidation of sow numbers and various factors such as high feed costs, ASF, environmental regulations, labor issues, reduced antibiotic usage, and disease concerns have contributed to the cautious state of the EU pork industry. EU hog slaughter numbers are expected to remain significantly lower throughout 2023. These dynamics of sow liquidation and rising hog prices are now affecting the US, Canada, and Mexico, as all three countries are cutting their production base.

In Q1-2023, Spanish pork and prepared product exports amounted to 382.19 thousand mt, down 7.4% compared to Q1-2022 when 412.82 thousand mt were shipped. Spanish pork exports were mainly destined for China (+1%), Japan (+19%), the Philippines (-24%), and South Korea (-26%). In W24, in Poland, ASF was discovered on four pig farms, bringing the total number of infected farms in 2023 to five. In 2022, there were 14 outbreaks of ASF in pigs in Poland. On June 14th, a closed farm in western Poland with 94 animals was diagnosed with ASF, followed by another outbreak on June 15th on a closed farm with 109 pigs. On June 16th, two more outbreaks occurred; one on a closed farm with 682 pigs on the border of Poland with the Kaliningrad region in Russia, and another on a fattening pig farm with 1,216 pigs in eastern Poland. Additionally, ASF has been regularly found in wild boars in Poland, with a significant number of outbreaks reported. In 2022, a total of 2,113 outbreaks were identified in wild boars, and in 2023, there have already been 1,748 outbreaks, resulting in nearly 3 thousand infected boars.

The Bavarian State Office for Statistics reports that as of May 3, 2023, there were around 3.13 thousand pig farmers in Bavaria with a minimum population of 50 pigs or 10 breeding sows, down 12.9% YoY. Additionally, the average herd size slightly rose from 704 to 708 animals per farm since May 2022. The total number of pigs in Bavarian farms reached 2.215 million, a decline of 12.4% YoY. This decline was driven by a 10.3% YoY decrease in the number of fattening pigs to 1.087 million and a 10.8% YoY drop in breeding sows to 147.9 thousand. Furthermore, the number of piglets witnessed a significant 20.9% YoY decline, totaling 592.3 thousand heads.

US pork production for Q2-2023 has been adjusted downwards to 6.635 billion pounds, with federally inspected hog slaughter estimated at 10.5 million heads in May-2023, a 0.7% YoY increase. However, after the adjustment, US pork production remained slightly lower than the 2022 levels at 2.3 billion pounds. The decrease can be attributed to lower dressed weights, averaging 215 pounds per head in May-2023, down nearly 3 pounds YoY. Hog prices in May-2023 averaged USD 55.35 per cwt, a decrease of over 25% YoY. Q2-2023 hog prices were raised to USD 57 per cwt, almost 25% lower than in 2022, while pork processors are expected to receive USD 82.63 per cwt from wholesale buyers, nearly 21% less than in 2022. Commercial pork production is expected to reach 27.376 billion pounds by the end of 2023, up 1.4% YoY, with 2024 production forecasted at 27.350 billion pounds. So far, US pork exports have risen by 300 million pounds to 6.8 billion pounds, over 7% higher than in 2022. The impact of Proposition 12 on the US pork sector remains uncertain, and there are concerns regarding meeting the pork demand in California.

In the first 11 working days of June-2023, Brazilian “in natura” pork exports reached 56.65 thousand mt, valued at USD 146.099 million. The average daily volume exported stood at 5,149mt, while the daily export value was around USD 13.281 million, up 29.7% in volume and 37.6% in value compared to the same period in 2022. Meanwhile, the average price of Brazilian pork shipments was USD 2,579.20, up 6.1% compared to the same period in 2022. These positive results demonstrate the growth of Brazilian pork exports, showing an increase in global demand for this product. Brazil continues to be a significant player in the global pork market, benefiting from the recognition of the quality and competitiveness of its products. Embrapa's Pig and Poultry Intelligence Center indicates that the cost of live pig production in the South region of Brazil decreased in May-2023, the third consecutive month of decreasing costs in the region. The average cost in May-2023, based on measurements from three states in the region, reached USD 1.22, down 9.9%, the highest MoM decline of 2023, and a decrease of 16.5% compared to Jan–2023. Despite the consecutive cost reductions, pig farmers in the southern region continue to face financial losses.

Lastly, SENACSA reports that in the first five months of 2023, Paraguayan pork exports amounted to 1,877mt, valued at USD 5.2 million, a growth of 1,147% in volume and 1,258% in value compared to the same period in 2022 when only 150mt were exported due to a global oversupply crisis. In the Jan-May period, Paraguayan pork shipments were mainly destined for Taiwan (45%), Uruguay (43%), Georgia (10%), and the Ivory Coast (2%). Notably, the first container of pork was sent to Taiwan in Jan-2023 after the official opening was achieved in Nov-2022. Also, it’s worth noting that at the end of May-2022, the only destinations for Paraguayan pork were Georgia and Uruguay, with a participation of 90% and 10%, respectively.