Brazilian pork exports increase to fill Chinese demand

Thursday, 15 October 2020

By Charlie Reeve

Brazilian fresh/frozen pork exports remain at high levels for 2020. During Q3 2020 Brazil exported 254,000 tonnes of pork, an increase of 53% on the previous year. This now puts Brazilian fresh/frozen pork exports at 675,300 tonnes for the first three quarters of 2020, a 43% increase year on year.

The major destination for this large increase in exports was China, which has accounted for 54% of total Brazilian fresh/frozen pork exports based on the first 9 months of 2020. Hong Kong, Singapore and Vietnam were the second, third and fourth largest destinations, all of which also had considerable growth in volumes of pork from Brazil year-on-year.

In 2019, exports accounted for 19% of Brazilian pork production, the domestic market consuming 81% of the pork produced, according to ABPA (Brazilian Association of Animal Protein). Based on the increase seen in export volumes, this figure is anticipated to rise over the course of 2020.

Brazilian prices have now overtaken EU pig prices. EU prices continue to decline, while US, Canada and Brazil markets have all seen price growth in recent months.  The European Commission’s latest global prices on 28 September quoted Brazilian pig meat at €150.56/100kg, and the EU price on the same day at €146.72.

The notable increase in the Brazilian pork prices is due to a combination of a reduced supply of pork domestically and increased demand from Asian export markets.

Supply has reduced in Brazil due to a rise in domestic feed prices. This has led to pigs being slaughtered at lower weights than usual, reducing the volume of meat produced.

The increased demand for Brazilian pork from Asian markets, in particular China, is because of African Swine Fever (ASF) which has decimated a large proportion of the Chinese pig herd. However China is working hard to rebuild its pig herd, although new cases of ASF have recently been reported.

As the price grows for Brazilian pork it is becoming less price competitive on the global stage and China may begin to look elsewhere. However, the recent outbreak of ASF in Germany has led to China banning imports of German pork, leaving it with fewer, so the higher prices may not be as much of a deterrent as initially anticipated.

The meat industry in Brazil has had concerns itself, over several widespread coronavirus outbreaks earlier in September. According to Reuters, more than 4,000 employees working for Brazil’s largest meat processor have tested positive for coronavirus, although a further 15,000 new employees had been taken on to help with the export demand.

Charlie Reeve

Analyst - Livestock

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