W30: Pork Update

In W30 in the pork landscape, pork production costs are expected to increase in Argentina due to the implementation of the "corn dollar" measure. This issue has already caused corn prices to rise by 25% since its implementation. The pork sector is among those that will be impacted due to the use of corn as a major component of the balanced diet for animals. The cost increase is estimated to be around USD 80/kilogram (kg), leading to a potential price increase of about 20% for live pigs. The Argentine pork sector is concerned about the impact on prices and possible pass-through to consumers. The PAIS tax on imported food products further aggravated the situation and uncertainties around potential exemptions for frozen pork imports from Brazil. The situation may discourage production and put further pressure on meat prices in the future.

Argentina's pork production in the first six months of 2023 reached 370.71 thousand metric tons (mt), a 5.1% increase compared to the same period in 2022. Argentine pork production in Jun-23 reached 64.70 thousand mt, an increase of 0.7% year-on-year (YoY) but down 3.9% month-on-month (MoM). The average slaughter weight in Jun-23 was 96kg/head, 1kg lower than in the same period in 2023. The average weight of the sow was 95kg, and the immunized boar was 101kg. The states of Buenos Aires, Santa Fe, and Cordoba contributed over 80% of Argentina's total slaughter output. In the first six months of 2023, Argentine pig slaughter was 3.94 million heads, a 5.6% YoY increase. Pigs accounted for 80.2% of the total slaughtered animals. Buenos Aires state contributed 50.4% of the pigs slaughtered at 1.99 million heads, followed by Santa Fe and Córdoba with 18.7% and 15.8%, respectively. Argentine pig slaughter in Jun-23 reached 670.88 thousand heads, a 0.8% YoY increase but a decrease of 4.4% MoM.

Lastly, pork exports from Russia reached 74 thousand mt, a significant surge of 57% in the first half of 2023 compared to the same period in 2022. Pork export revenues also registered a remarkable increase of 86% YoY. Notably, Russian pork exports to Vietnam skyrocketed, with shipments increasing by 2.6 times in value and 2.1 times in volume, with over 60% being frozen meat and 35% offal. Other destinations were Belarus at over 20 thousand mt (+44%), and Mongolia at 3.3 thousand mt (+33%). The National Union of Pig Breeders (NSS) indicates that pork exports to non-Commonwealth of Independent States (CIS) countries, especially Vietnam and Hong Kong, were being restored, and shipments to Belarus were maintained. The 2023-end projections for pork exports from Russia could reach 220 to 230 thousand mt, valued at USD 500 million if export rates are maintained. This would help unload the market. However, a potential market glut is the main risk for pig production. This is where supply exceeds demand, making foreign markets an important sales channel to avoid oversupply in the domestic market.