Porto Alegre, August 24th 2022 – Brazilian pork exports continue to recover, with July marking the best performance of the year, both in terms of volume and revenue. In the month, 94.592 thousand tons were exported (fresh and processed), which brings a certain tone of optimism to the market, considering that it helps to reduce domestic availability. However, the domestic scenario is still challenging, and live hog prices have not been able to find levels that allow a return to profitability in much of the country. The cost of production continues to weigh on the margins and must make some producers give up the activity, those who are more financially fragile and less efficient.
In the July result, some points deserve to be highlighted, such as the price per ton and the main destinations of the Brazilian product. The average price per ton exported was USD 2,327.38 in July, down 1.49% compared to the USD 2,362.56 recorded last month and a decrease of 3.92% compared to July 2021, when it was at USD 2,422.39. However, the recovery of prices is seen, which together with a devalued real, favors the market at the moment. The attached graph reflects the monthly evolution of the price per ton and clearly shows that China dictates the trend, still the largest importer of Brazilian pork.
China bought 38,440 tons in July, the highest volume in 2022, which corresponds to 40.64% of the total. Compared to 2021, there was a retraction, as can be seen in the attached table, which is natural, since the Chinese have a comfortable supply. It is worth noting that the Chinese government built reserves in the first half of the year with local purchases and may release them if prices soar in the future. The fact is that Brazil is still managing to sell excellent volumes to China given the scenario described, possibly due to the competitive price compared to other major exporting players, such as the United States and the European Union. The production adjustment in these markets took place before and prices have already skyrocketed, unlike in Brazil, where the process is ongoing and prices may reach healthy levels in the domestic market only in 2023, with a more favorable availability scenario.
The Chinese market must be closely monitored, considering that it is by far our biggest importer and that Brazilian exports are concentrated despite increasing imports from other countries. The second largest destination for Brazilian pork in July was the Philippines, with 8.289 thousand tons, which corresponds to a share of 8.76%. Filipinos have a supply deficit due to African swine fever (ASF). Hong Kong occupied third place with 7.011 thousand tons, a share of 7.41%. Another highlight of July was Thailand, with 5.013 thousand tons, which is noteworthy, considering that historically it buys very little from Brazil and has grown gradually, in a process similar to that seen in the case of the Philippines. The country has also suffered from animal health issues over the past few years.