Brazil. Swine Semi-annual. Mar 2015 April 9, 2015

Animal Numbers, Swine

Production:

Post forecasts hog production to increase by one and half percent in 2015 to support higher pork exports since domestic demand remains slow. Nearly 60 percent of hog production in Brazil is concentrated in the three southern states of Santa Catarina (which is the only state in Brazil free of Foot-and-Mouth Disease (FMD) without vaccination, Parana and Rio Grande do Sul. Because production in these states is highly vertically integrated, high returns are likely expected for hog producers in these areas due to the strong support from large pork packers. During 2014, hog producers experienced so far one of the best years in terms of profitability due to lower costs of inputs (corn and soybeans) combined with an adjustable supply and demand of hogs, keeping prices at high levels throughout the year. These factors are likely to continue in 2015.

Production, Supply and Demand Data Statistics:

Meat, Swine

Production:

Post forecasts an increase of nearly one percent in pork production in 2015, at 3.3 million metric tons (MT/CWE). This forecast reflects the current optimism of the pork industry with a rebound in the export markets and a marginal increase in domestic demand. Packers are also confident due to expected lower feed costs and sustainable domestic and export prices next year. However, the devaluation of the Brazilian currency, although helps pork exports, can adversely impact on production costs this year, mostly on imported medications and additives.

Consumption:

Post forecasts a marginal increase in domestic consumption of pork, at 2.7 million metric tons (MT/CWE), as Brazilian consumers will likely remain price conscious in 2015 due to firm market prices for pork, more competitive than beef, but less than chicken, and the overall indebtedness of Brazilian consumers. In 2014, pork prices were more competitive than beef for approximately 10 percent, but higher than chicken prices by 7 percent. Packers believe that these conditions will likely prevail in 2015.

An intense marketing campaign in the past years has improved fresh consumption of pork, but pork utilization in Brazil is estimated at 67 percent for industrial/processing and only 33 percent for fresh consumption. Promotional activities in Brazil are trying to address constraints affecting fresh pork consumption, such as a concentration during the winter months (June-August) and regional concentration of pork consumption in the southern regions of the country.

Trade:

Brazilian pork exports are forecast to rebound by two percent in 2015, mostly due to the projected higher exports to Russia. The continued import ban on several countries imposed by the Russian Federation is benefitting Brazilian exporters. In 2014, market share of Brazilian pork exports reached 43 percent in Russia. Local exporters believe that they will maintain this market share in 2015

Except for Ukraine, due to the political uncertainties in that market, pork exporters also look forward to increases in pork exports to their major markets such as Angola, Hong Kong, Chile, Japan, and South Africa, who recently allowed access for Brazilian pork. South Korea remains a priority in trade negotiations.

Production, Supply and Demand Data Statistics: