Porto Alegre, August 13, 2020 – Nominally, carcass and live pig prices reached a record level in Brazil’s Center-South at the beginning of August. On August 6, the average of live pigs in the region was BRL 5.89, according to a survey by SAFRAS & Mercado, which represents an increase of 33.86% over the average of BRL 4.40 registered a month earlier.
Bullish factors predominate, which can keep prices at high levels in the coming few weeks, namely: the reduction in the average weight of animals in several states, such as SC, MG, RS, and SP, which means less volume of meat available in the market; the search by farmers for corrections due to the increase in production costs, with a sharp high in corn and soymeal throughout the country; the easing process of the quarantine, which makes demanding activities, such as restaurants, try to replenish stocks, thus improving the meat flow by slaughterhouses; accelerated export pace. Besides these factors, the Father’s Day favored the business flow along the chain in the first half of August.
A point worth mentioning is that domestic demand will feel the effect of the deepening of the COVID-19 crisis for a relatively long period, considering the deterioration of household income and the increase in the level of unemployment. Pork is an affordable protein compared to beef, but in an environment of severe crisis some consumers tend to migrate directly to chicken and eggs. From the current price of live pig and wholesale cuts, the transfer to the final tip tends to be increasingly difficult, and slaughterhouses may try to avoid a new surge in the price of live pigs.
Exports play an important role and explain much of the positive picture that the Brazilian pig market is currently experiencing. Since May, monthly shipments have reached around 100 thousand tons, driven by purchases from China, absorbing the supply from the southern states of the country mainly, where most mills accredited to ship to China are located. The outlook is for continued good results over the next few months, given the large production deficit in the Chinese market, a consequence of ASF, which could result in Brazilian pork exports above 1 million tons in 2020. For the monthly volume to exceed 100 thousand tons, it would be necessary to enable new slaughterhouses, still bumping into ractopamine as an obstacle.