Production:

The New Post 2015 Mexican pork production estimate is revised upward from the USDA official to 1.315 MMT CWE, mainly due to the availability of animal feed, especially grain, at lower prices. Industry sources report that, consequently, higher slaughter rates and slightly higher carcass weights are expected. Swine will continue to be slaughtered at around 120-130 kg live weight with a carcass weight of around 82-84 kg. Due to ongoing PED virus control efforts and market incentives, Post is revising slightly upward the 2015 forecast for breeding sows. It is expected that this increase will result in additional piglet production, in turn leading to the previously mentioned increase in hog slaughter.

Despite the PED outbreak in Mexico during 2014, the production estimate for 2014 is revised slightly up, mainly due to the fact that the sector was able to handle the after effects of the virus better than expected. This situation made more hogs than previously forecast available for slaughter. Post's 2014 slaughter rate was adjusted accordingly to a level above the USDA official. Post's 2013 production estimate is revised slightly up due to recently revised official final figures.

Better genetics combined with lower grain prices are contributing to lower production costs across the Mexican production chain. Consequently, industry members continue to strengthen and expand the productivity of their nearly 5,600 farms to take advantage of expected better margins with lower feeding costs and continued favorable domestic pork prices. They will also seek to meet anticipated demand for pork cut exports for the Japanese and Korean markets as well as the opening of the Chinese market.

Commercial farms in Mexico will continue to address PED challenges and are operating with improved biosecurity measures to control its spreading. According to private industry sources, to date, virus control efforts have been acceptably successful, though the threat remains. Consequently, Post revised slightly up the loss forecast for 2015, which is more in line with historical levels, compared to the 2015 USDA official figure. Loss during 2014 was kept mostly unchanged. Loss in 2013 was slightly adjusted to balance the tables.

Consumption:

The New Post 2015 total pork consumption estimate is revised to 2.035 MMT CWE, which is above the USDA 2015 official figure. Pork consumption for 2014 was revised slightly higher given increased production and slightly reduced exports. For 2013, domestic consumption was revised marginally higher due to the availability of the latest official production data. Competition with poultry prices has led to relatively stable, though growing, demand.

Private sources indicate that per capita consumption during the previous two years marginally increased from 16 to 16.6 kilograms which reflects the acceptance of pork meat among consumers. It is expected that by the end of 2015 per capita consumption will rebound to 17 kilograms due the recognition among consumers of pork meat being an affordable and healthy source of protein.

Trade:

The New Post 2015 import forecast is maintained at 840,000 MT CWE, despite the headwinds of a stronger dollar, as import demand will be supported by rising prices for beef and growing population. The majority of Mexico's pork imports will remain hams and picnics as well as mechanically deboned meat (MDM), all for the preparation of sausages, deli hams, and other cold cuts. Nearly 90 percent of these imports are of U.S. origin. The 2014 import level was revised slightly up, mainly due to the above mentioned higher demand generated by consumer shifts from beef.

The New Post export estimate for 2015 is revised slightly down from the USDA 2015 official number. Although the country continues to succeed in opening export markets and expand its share of exports to Asian markets, like Japan, some of these potential new market successes are progressing slower than previously forecast, especially with regard to China, which has yet to import meaningful volumes from Mexico. The industry believes that exports to this last market can only be significant if new and recent pork production facilities customize their operations to comply with that market's requirements, which include most importantly, the guarantee of segregation of product produced without ractopamine. Consequently, significantly larger exports to China could only be expected with the initiation of new or recently built plants that have segregation capability and that also have the desire to forgo traditional domestic markets in search of a premium in China. To date, China has approved five Mexican establishments as eligible to export pork. Many of these, however, are long established producers that focus on the domestic market. Similarly, Post is revising slightly down the estimate for 2014 exports, compared to the USDA official figures. The Post 2013 export estimate is unchanged based on available data.

Japan remains Mexico's number one export market by volume and value—this situation is not expected to change.

Policy:

Closer to home, in 2014 USDA/APHIS announced a proposed rule that would expand U.S. market access eligibility to all Mexican states (with the exception of Chiapas), based on an improved disease status determination related to Classical Swine Fever (CSF). A final determination and implementation of this rule is pending. Mexico has petitioned the World Animal Health Organization (OIE) for a more favorable CSF status recognition. This review is also pending.

Production, Supply and Demand Data Statistics:

Animal Numbers,Swine

Mexico

2013

2014

2015

Market Begin YearJan 2013

Market Begin YearJan 2014

Market Begin YearJan 2015

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Total Beginning Stocks

9,510

9,510

9,876

9,875

9,625

9,675

Sow Beginning Stocks

1,075

1,075

1,080

1,080

1,080

1,085

Production (Pig Crop)

16,850

16,850

16,200

16,300

16,300

16,500

Total Imports

9

10

10

11

10

12

Total Supply

26,369

26,370

26,086

26,186

25,935

26,187

Total Exports

0

0

0

0

0

0

Sow Slaughter

13

13

15

15

15

15

Other Slaughter

15,680

15,680

15,450

15,500

15,400

15,575

Total Slaughter

15,693

15,693

15,465

15,515

15,415

15,590

Loss

800

802

996

996

770

797

Ending Inventories

9,876

9,875

9,625

9,675

9,750

9,800

Total Distribution

26,369

26,370

26,086

26,186

25,935

26,187

1000 HEAD, PERCENT

Meat, Swine

Mexico

2013

2014

2015

Market Begin YearJan 2013

Market Begin YearJan 2014

Market Begin YearJan 2015

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Slaughter (Reference)

15,693

15,693

15,465

15,515

15,415

15,590

Beginning Stocks

0

0

0

0

0

0

Production

1,281

1,284

1,280

1,290

1,290

1,315

Total Imports

783

783

815

820

840

840

Total Supply

2,064

2,067

2,095

2,110

2,130

2,155

Total Exports

111

111

120

115

125

120

Human Dom. Consumption

1,953

1,956

1,975

1,995

2,005

2,035

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

1,953

1,956

1,975

1,995

2,005

2,035

Ending Stocks

0

0

0

0

0

0

Total Distribution

2,064

2,067

2,095

2,110

2,130

2,155

1000 HEAD, 1000 MT CWE, PERCENT, PEOPLE, KG