Porto Alegre, October 9, 2020 – The price of live hogs and the main wholesale cuts are firm in Brazil and with no signs of reversal for the coming few weeks. The main points to be analyzed at this time are: the strong pace of exports, lean domestic availability, and the trend of rising production costs. The availability of pork in the domestic market is tight, reflecting the heated shipments and the average weight of the animals that go to slaughter, which are said to be lower than normal.
As for exports, the 2020 numbers are driven by purchases from China, which seeks to narrow its large supply gap derived from ASF. On October 1, the Foreign Trade Secretary (SECEX) released the preliminary data for the month of September. Brazil exported 76,053 thousand tons of fresh, chilled, and frozen pork. With the number of processed products to be released in the coming few days, September exports must close at around 85 thousand tons.
Regarding costs, corn and soymeal – components of the feedstuff – are in an upward movement across the country, being the biggest concern of farmers at this time. Meal suffers from a shortage of supply, as a result of the accelerated sales of soybeans abroad, therefore the price picture must not change significantly until the next season, in March/April 2021. As for corn, there is product in the national market, but producers opt for retention, evaluating factors such as the dollar high against the real, strong price at ports, and adverse weather for the summer crop. The situation for corn tends to worsen throughout the first half of 2021, which deserves much attention. Because of the high cost of production, pig farmers are looking for corrections for live pigs to maintain their margins. Moreover, a high cost means that the animals will be retained for a shorter time in farms, resulting in lower average weight, a factor that ends up resulting in less availability of pork, as previously mentioned. Meat-packers are trying to block major swine adjustments at this time, but the tight supply in view of their needs ends up limiting this strategy.