W3: Weekly Pork Update

Global

The US Department of Agriculture Raised the Forecast for World Pork Production (Jan 16)

The US Department of Agriculture raised the forecast for world pork production in 2023 by 3%, from 110.98M MT to 114.09M MT against the backdrop of an increase in the production of this meat in China. In the previous review, in October 2022, American analysts estimated the production potential in China at 52M MT, and currently it is 55M MT. It is expected that the demand for pork in China will increase due to the recently lifted restrictions on COVID-19. Production projections for other countries remain largely unchanged, the survey said.

Europe

Swine Fever Kills 1.5M Pigs in Europe and Hits Slaughterhouses (Jan 16)

In just two years, African swine fever killed 1.5M pigs in Europe alone. Worldwide data rose to 2.02M deaths among domestic pigs and wild boars, the main ones affected by this disease, which has a mortality rate of almost 100%. That's a problem when pork accounts for 35% of the world's animal protein intake. Swine fever was eradicated in Europe in the 1990s, although it reappeared in 2005, although it was not until 2014 that the first cases occurred in Europe. This disease has already been reported in 32 different countries and since 2020 in 10 more. Since the World Organization for Animal Health started to count the cases of death, pig deaths have increased by 130% in Europe between 2020 and 2022, as there are only two years since swine fever deaths on the mainland were 654,809.

A New Swine Disease Similar to Foot-And-Mouth Disease Breaks Into Europe (Jan 20)

The UK has recently confirmed the presence of Seneca Valley virus on several farms. As explained by the country's authorities, "the five cases of vesicular disease in pigs identified on farms in England between June and September 2022 were the Seneca Valley virus." Senecavirus A (SVA) is the only member of the genus Senecavirus, within the family Picornaviridae. This virus was accidentally discovered in 2002 and its use as an oncolytic virus has been proposed to treat different tumors in humans. SVA had previously been found occasionally in lesions of pigs affected by so-called idiopathic vesicular disease in Canada in 2008 and 2012, respectively. Seneca Valley virus is not a World Organization for Animal Health (WOAH) listed disease. However, the clinical signs resemble notifiable vesicular diseases, particularly foot-and-mouth disease.

United States

Lean hog futures end mixed (Jan 16)

CME lean hog futures ended mixed on Jan 13, as pressure from weak cash hog prices and ample supplies was offset by a sharply higher wholesale pork carcass cutout value. The US Department of Agriculture said the pork cutout jumped to USD 81.64 per cwt on Jan 13, up USD 2.31 from a near two-year low posted the prior day. Pork packer margins remained weak at an estimated USD 2.00 per head on the day, down from USD 7.50 a week ago. CME February lean hogs ended 0.100 cent lower at USD 1,733.93/MT (78.650 cents/lb) while April futures were up 0.100 cent at USD 1,924.08/MT (87.275 cents/lb). Deferred contracts were 0.275 cent lower to 0.650 higher.

USDA Projections for Us Hog Farming Confuse the Industry (Jan 18)

The US Department of Agriculture (USDA) Dec. 1 hog report indicated that hog inventory on the market was 66.96mn, compared to 68.32m in 2022. A 2% YoY decline. After seeing the 2% reduction in inventory, it came as a surprise to producers to read the US Government's Quarterly Animal Protein Production report released. With inventory 2% lower than last year, the USDA production report predicts 2% more pork in 2023. You really wonder if the USDA has internal communication. There is no way that the United States will produce 4% more pork in the fourth quarter of 2023 compared to 2022. There is no scenario in the economy of this market that makes producers believe that there will be a 4% growth. Negative producer margins, construction costs, feed prices, labor issues and the maintenance and disposal model were all negative.

Lean Hog Futures Decline in the US (Jan 20)

CME lean hog futures declined on Jan 19 on recent weakness in wholesale pork prices and worries about export demand from China. February lean hog futures ended down 0.675 cent at USD 1,689.84/MT (76.650 cents/lb), while most-active April futures fell 1.800 cents at USD 1,860.70/MT (84.400 cents/lb) after touching a 3-1/2-month low at USD 1,853.53/MT (84.075 cents). Wholesale pork prices formed from two-year lows set this week, led by higher ham prices. The USDA quoted the pork carcass cutout on Jan 19 afternoon at USD 79.57 per cwt, up USD 1.68 from Jan 18.

Germany

The Situation of Pig Farmers Is Getting More and More Difficult (Jan 20)

As the breeder says, the problem is mainly the fattening of pigs. It is true that since the beginning of January on the pig market, despite the stagnation of prices in Germany, there have been clear downward corrections. Only in W3, after the Wednesday session of the German stock exchange, some plants reduced the rates for fattening pigs by about USD 0.069 (PLN 0.30). These reductions were unjustified, mainly due to the low pig population in Russia, which resulted in a limited supply of raw material. Meat plants would explain this phenomenon with the need to import pigs from outside due to the low availability of domestic animals. Therefore, there was a kind of tug of war and much depended on whether breeders would accept such reductions. If they transferred pigs to plants that have not lowered their prices, it would be a signal to other processors that the current prices were not acceptable.

Netherlands 

Evolution of Dutch Pork Exports (Jan 16)

After years of continuous declines in the number of Dutch pigs exported, from more than 3M in 2018 to 704.15K in 2021, last year there was a change in trend, with a total of 817.96K head exported, which represented an increase of 13 % compared to the previous year. Germany, despite having had a 50% drop in imports of Dutch pigs in 2021, remained, in 2022, as the main destination with a share of 67.7% in total Dutch pork exports. It should be noted that in previous years it represented more than 90%. Although with values much lower than those of Germany, Spain has become the second destination in recent years and this past year has doubled the number of pigs imported from the Netherlands, rising from 48.24K in 2021 to 94.22K in 2022.

Brazil

Drop in Pork Prices in China Is a Point of Attention for the Sector in Brazil in 2023 (Jan 16)

According to a report released by Itaú BBA regarding several Brazilian agro-products in January, in the case of pig farming, analysts detail that, in a shorter term, the scenario of Chinese pig farming calls for attention. This is because, even with a positive outlook for exports of fresh Brazilian protein from Brazil, with prices currently at high levels, pork prices in China have dropped since November 2022, after a year of recovery in herds. Despite this point of attention, Itaú BBA also points out that African Swine Fever remains a challenge in many Asian and European regions, which should provide opportunities for Brazil, which has also advanced in agreements with important global importers, such as Canada.

First Quarter Must Be the Most Difficult Period of the Year for Pigs (Jan 16)

Demand at the final end and replacement along the chain were positive in December, which favored readjustments in both carcass and live pigs, slightly improving activity margins in the period before the New Year, albeit still squeezed by the high cost of nutrition. The supply of animals was balanced, and average weight continued to be reduced, which also helped price formation. The average live kilogram traded in the Center-South of the country closed last December at USD 1.30 (BRL 6.70), up 6.1% from the closing of November, when the average was USD 1.23 (BRL 6.32). However, after the year-end celebrations, prices were already facing difficulties due to slower replenishment between wholesale and retail given the prospect of cooling demand at the final end.

Live Hog Price in the South Region Drops by 7.5% in 2022 (Jan 19)

Although in the last two months of last year they reached the best prices of 2022 in the South region and very close to those received in the same period of the previous year, during the year pig farmers received lower prices than those achieved in 2021. The amount accumulated over the year reached an average value of USD 1.12 (R$5.76), down 7.5% over the same period of the previous year, while pointing to an increase of 15% over what was received during 2020, when prices began to show strong evolution during the second semester, reaching a record price not yet surpassed in November of that year.

Competitiveness of Pork Grows Compared to Beef, but Falls Compared to Chicken (Jan 19)

The competitiveness of pork has increased in relation to beef, but has fallen in relation to poultry. Pork, chicken and beef sold wholesale in Greater São Paulo have been registering devaluations in this part of January. However, the downward movement in pork and beef protein prices is less intense than that observed for chicken. Given this scenario, the competitiveness of pork has increased in relation to beef, but has fallen in relation to poultry. For pork, specifically, agents consulted by Cepea report that weakened demand pressured prices in the second half of January.

Mexico

Veracruz and Jalisco, the Livestock Giants in Mexico (Jan 16)

Regarding pork, the SIAP indicated that until November, the Mexican pig farm produced 1.5M MT., a tonnage that exceeded by 2.8% that was generated during the first 11 months of 2021. In this case, the state with the highest participation was Jalisco with 363.55MT, and a growth of 4.4%. For Jalisco, the main producing municipalities were San Juan de los Lagos, Tepatitlán de Morelos, Arandas and Acatic, who together contributed 52.7% to the total value of the entity's pork production, which in 2021 closed at USD 1.107B ( 20.815B pesos).

Poland

In Poland, the German Fattening Stock Market Remains Stagnant (Jan 19)

At the beginning of the week, domestic procurement paid farmers an average of USD 2.14/kg (PLN 9.25) of fattening pig in class E, and USD 1.66/kg (PLN 7.18) of fattening pig in live weight. Unofficially, however, despite the stagnation of prices in Germany, domestic purchases have reduced prices by up to USD 0.069 (30 groszy). Thus, the already difficult situation of farmers will deteriorate further.

Chile

Closing of Chilean Pork Exports for 2022 and World Projections for 2023 (Jan 18)

It is projected that by 2022, the pork industry will export more than 393K MT of rod, reaching USD 646M, which is equivalent to 58% of the total volume of Chilean meat exported. Rabobank projected that in 2023 the industry will continue to be challenged by high production costs and changing consumer trends. This is a general scenario to highlight since global and national contingencies presented different difficulties for the industry in 2022, as occurred for various other sectors: inflation, high prices of raw materials, political and social conflicts, and various diseases, all which became challenges to overcome, and which directly and indirectly affected production costs, stability and projections. In this sense, the Chilean industry should have been resilient, positively dealing with various situations despite adversity.

Colombia

Free Way for the Export of Beef, Pork, Poultry, and Dairy Products to Cuba (Jan 17)

Colombia obtained this authorization after the recognition of the Colombian official inspection system as equivalent to that of the Caribbean country. According to the Ministry of Commerce, this is the result of the audit carried out by the National Center for Animal Health - Cenasa de Cuba, in November and December 2022.

United Kingdom

UK Pig Farmers Voice Alarm Over Shrinking Sector (Jan 16)

A new Danish bacon factory in Rochdale marks the decline in Britain’s pork industry as big retailers look to cheaper imports. The UK pig population has fallen from about 8M in the 1990s to just over 5M currently. The decline is not from a lack of consumer demand for bacon and pork. UK imported USD 2.18B (£2bn) worth of pork products last year. But shrinkage in production from UK farms seems to be unique to pigs.

Growth in 2022 Annual UK Pig Meat Production (Jan 17)

UK pig meat production totaled 80.10K MT in December 2022, according to the latest Defra data. This was a drop of 13% (11.80K MT) compared to November as the festive holidays disrupted usual kill patterns. Although this volume is significantly below those seen a year ago (-11%, 9.80K MT) it is marginally above (+0.6%, 400MT) the 5-year average for the month of December. This brings the annual pig meat production volume for 2022 to 1.05M MT, an increase of 1.2% (12.60K MT) compared to 2021.

UK Pig Meat Production Rises in 2022 on the Back of Heavier Carcass Weights (Jan 17)

UK pig meat production increased by 1.2%, 12.60K MT, to 1.05M MT, despite lower slaughter pig numbers. A total of 1.2M clean pigs were slaughtered in 2022, a 0.6% decrease, representing 62K head. AHDB analyst Freya Shuttle-worth said it was likely that this YoY decline in slaughter numbers was due to the additional bank holidays last year, creating fewer working days. Carcass weights have been the main driver for increased production in 2022.

Seneca Valley Virus Confirmed in Pigs in England (Jan 20)

The UK Chief Veterinary Officer confirmed that the five cases of vesicular disease in pigs identified in farms in England between June and September 2022 were Seneca Valley Virus (SVV) in W2, according to a government press release. The confirmation comes following an extensive investigation by the Animal Plant Health Agency (APHA). SVV is not a notifiable or reportable disease in the UK nor a listed disease by the World Organisation of Animal Health (WOAH).

Russia

The Situation With ASF in the Russian Federation Is Unfavorable, but Controlled (Jan 20)

Rosselkhoznadzor assessed the situation with African swine fever (ASF) in Russia as unfavorable, but controlled. At the same time, Lebedev noted that the loss in the number of animals in 2022 was many times lower. He explained that the main problem in 2021 was the shadow sale of large volumes of gray pork and food waste through online trading platforms, social networks and instant messengers. He added that the territorial departments of the Rosselkhoznadzor and law enforcement agencies carried out a set of measures aimed at curbing the activities of private and legal entities engaged in illegal sales, as well as the legalization of meat products and food waste. According to him, the departmental information system Vetis, as well as territorial monitoring groups of the Rosselkhoznadzor, which monitor social networks and online trading platforms, play the main role in suppressing trade and legalizing meat products of unknown origin.

China

In 2023, China’s Demand for Red Meat Will Grow (Jan 16)

The USDA expects pork meat to reach 114M MT due to higher production in China, a country that would increase its demand due to the relaxation of restrictions due to covid-19. Global pork exports by 2023 are expected to hit 10.7M MT as exports from the EU, Brazil and the US rise on stronger-than-anticipated demand from key Asian markets. Upward revisions in imports from China and the Philippines will more than offset the decline in the United States. 

Chinese Pork Production Soars to Eight-Year High (Jan 17)

Chinese pork output rose by 4.6% in 2022 to reach its highest level in eight years, official Government data showed. China produced 55.41M MT of pork last year, compared with 52.96M MT in 2021 and the highest figure since the 56.71M MT recorded in 2014, signifying that the Chinese pork sector is well and truly back on track after the disruption caused by its huge African swine outbreak. Output was boosted by fourth-quarter production of 13.91M MT, up nearly 1% on Q4 2021, despite a shortage of slaughterhouse labor due to COVID outbreaks.

China Asks Meat Packers to Increase Inventories, Help Stabilize Pork Prices (Jan 17)

China's top planning body has urged meat packers to increase commercial hog stocks to help revive market demand and boost hog prices. The National Development and Reform Commission (NDRC) also said it would take timely measures such as increasing meat reserves if necessary to promote pork market stability. Pork is a popular food in China and changes in prices have an impact on inflation. The NDRC made the suggestions at a meeting recently held with some major slaughter companies in response to weak hog prices. Meeting participants said hog prices had declined due to weak consumption and increased supply, according to the statement. Recently, however, pork consumption has recovered, and a further pick-up in demand is expected to bring pork prices back to reasonable levels, the statement added.

China Sets Target to Restore Its Pig Herd (Jan 19)

As the world's largest producer and consumer of pork, China suffered a major blow from the African swine fever (ASF) outbreak in 2018 and has since been trying to restore its hog herd amid further complications from COVID-19 , the "hog cycle" and inflation, among other factors. As a result of the devastation wrought by ASF, China's pork imports increased significantly from 2019 to 202. As China gradually rebuilds its hog herd, its pork imports will drop sharply in 2022, although the prolonged impact of ASF combined with the effect of the “pork cycle” and market speculation activities keeping current pork prices reasonably high (around USD 4.6/kg).

Exports to China From the Mexican Pork Industry Reach a Value of USD 44.4M (Jan 20)

The United States Department of Agriculture (USDA) estimates that world pork production by 2023 will be 114.0M MT. The fact that pork is part of the habitual consumption in Mexican homes is motivated by the preference and daily need of the buyer rather than by purchasing power. According to data from the United States Department of Agriculture (USDA), currently the consumption of pork in Mexico is 18 kg per inhabitant. This domestic animal is used not only for its meat, but also by-products such as chorizo, ham, bacon, among others, and its way of tasting it is so varied that, being considered a simple spice, it occupies an important place in Chinese gastronomy.

The bleeding continues in lean hog futures plus China (Jan 20)

Lean hog futures prices in W3 extended the steep downdraft as prices hit three-month lows. There was strong chart support at the October lows that will likely halt the price declines. The lean hog futures bulls point out that retailers were buying a lot of pork. US packers moved 388.1 loads of pork, bringing this week’s volume to 1,253.5 loads. Wholesale pork prices are cheap compared to beef. The CME lean hog index continued its recent drop. The backlog of hogs on US farms created by extended packer cutbacks through the holiday season remains a force driving hog prices lower. Still, the tight numbers and low weights that dominated the hog market late last year, as well as the 2% YoY hog supply reductions implied by the USDA’s December Hogs & Pigs report, suggest a recovery in hog prices soon. 

Farmers Are Urged to Reduce the Number of Sows (Jan 22)

China's Ministry of Agriculture urged farmers to take measures to reduce excessive pork production and pressure on prices, which an official said had fallen below the cost of breeding due to weak consumption. China is the world's largest producer of pork and has struggled for years with price volatility and cyclical pig production, especially after the 2018 outbreak of African swine fever. Average live pig prices fell for 11 straight weeks to USD 2.40/kg (16.3 yuan) in mid-January, below the breeding price of USD 2.46 (16.7 yuan), said Zeng Yande, chief agronomist and director of the Development Planning Department. The Ministry of Agriculture of China.reminded that as of November 3, 2022, pig farms in Germany kept 21.3M heads, updating the minimum since 2020.

Argentina

Argentina Announces the Productive Strengthening Program, Aimed At Pig Producers (Jan 18)

In Argentina, the Minister of Economy, Sergio Massa, the Governor of Entre Ríos, Gustavo Bordet, and the Secretary of Agriculture, Livestock and Fisheries of the Nation, Juan José Bahillo, have presented the Argentine Productive Strengthening Program for pig producers and poultry. The program will allow pork producers with less than 1K sows to receive compensation of USD 30K/MT (152 euros) of soybeans, or their equivalents in by-products or balanced feed, purchased between November 28 and December 30, 2022. Reaching to 98% of the producers, establishing a maximum limit of USD 5M (25K euros) in the amount to be compensated.

Ukraine

Estimated Data on the Number of Pigs in Ukraine (Jan 19)

As of January 1, 2023, agricultural enterprises and households kept 5M pigs, which is 9.1% less than a year ago. This was reported by the Ministry of Agrarian Policy, referring to its own calculations.

Malaysia

18 Pig Farms Hit by African Swine Fever in Malaysia’s Penang State (Jan 20)

African swine fever (ASF) continues to spread in Penang state, Malaysia, with seven more pig farms hit, bringing the total number of farms affected by the outbreak so far to 18 across three districts. Chief Minister Chow Kon Yeow said 48,194 animals were affected in these commercial pig productions, 14 of which are in Seberang Perai Selatan District (SPS) and two in Seberang Perai Tengah (SPT) and Seberang Perai Utara (SPU) Districts.

Philippines

Philippine Pork Production Expected to Rise This Year (Jan 16)

Philippine pork production is forecasted to reach 1M MT in 2023 as commercial pork producers plan to raise larger pigs. This would represent an 8% increase from 2022 (925K MT) as production was reduced due to African swine fever outbreaks. Pork imports, meanwhile, are forecasted to increase 4% from last year to reach 600K MT in response to lower tariffs that have been extended through December 31, 2023.

Dominican Republic

The Dominican Republic Strongly Increases Its Purchases of Pork From the US (Jan 16)

According to USMEF data, the Dominican Republic is a market dominated by US pork exports. The main reason is the free trade agreement between the two countries in force since 2007. In 2006, the last year that US pork was subject to the 25% tariff rate in the Dominican market, US exports were just over 4K MT, valued at USD 6.6M. In 2010 they came to have a value of USD 38M and in 2020 they reached USD 90M. Currently, with the ASF outbreaks in the Caribbean country, during 2022 according to the USDA pig production has been reduced by 28% and it is expected that in 2023 it will drop another 9%. Given this, USMEF believes that the country's self-sufficiency capacity will drop from 61% in 2020 to 32% in 2022. US exports to the Dominican Republic broke records in November, reaching 10.23M MT, up 70% from 2022. November export value nearly doubled YoY to a record 30.1M MT.