Porto Alegre, May 18, 2023 – The pigs x corn exchange ratio continued to advance in the first half of April, bringing relief to pig farmers. There is still concern about the evolution of pork prices in the country, even with the hikes registered in the first half of May, however, more consistent readjustments will only happen when domestic availability shrinks, which does not happen in this first half of the year, even with the great pace of exports. In other words, Brazilian production is advancing consistently.
The point to be monitored over the next few months is that the decline in cost could lead to an increase in the average weight of animals and encourage the advancement of housing and births, which could impact the market in the medium and long term should domestic demand and/or exports not follow production growth.
On May 11, the average price per live kilogram traded of pigs in the Center-South of the country closed at BRL 6.18, an increase of 4.2% from the BRL 5.93 registered at the end of April. In São Paulo, the arroba increased 4.76% in the period, going from BRL 126.00 to 132.00. On the other hand, corn continues on a downward trend in the fortnight, with producers increasing offers, with little retention power due to lack of space in warehouses. In Campinas, a bag of corn was priced at BRL 62.00 on the 11th, down 8.82% since the end of April, when it was quoted at BRL 68.00. If compared to the BRL 90.50 registered in mid-March, the decline reaches 31.49% in the market.
Corn lows are widespread in the country. Average cereal prices have dropped between 25% and 30% in the southern states since March 13. There is currently no factor that indicates stress for corn in the coming few months, which is positive for pig farming. A great second corn crop and high US production tend to maintain a low price scenario for corn in the second half. The points to be closely monitored are: the exchange rate and climate evolution in Brazil and the USA. The weather is evolving well in both countries, with no signs of trouble in the short term.
With the sharp decline in corn and the rise in live pig prices in recent days, the trade ratio between live pigs and corn is at the highest level in recent years. The attached graph shows that the ratio reached 2.13 in São Paulo on the 11th. In other words, with one arroba of pork it is possible to buy 2.13 corn bags in the state. In Santa Catarina, the largest producer of pork in the country, the ratio reached 1.82. Market agents point out that a good exchange ratio is in the range of 2.00 to 2.50. Thus, pig farming is moving toward favorable margins, which tends to happen in the second half of the year. However, the sector must pay attention to pork production levels, so that the scenario is confirmed.
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