Porto Alegre, February 23, 2024 – Last week, an outbreak of African swine fever (ASF) was reported on a commercial farm in Gyeongsang province, South Korea. Until then, the disease was restricted to wild boars. Authorities adopted quick measures, such as: slaughtering and discarding the approximately 500 animals on the property; inspecting farms in a radius of 10 kilometers; restricting the movement of employees and vehicles.
The news brings speculation about possible impacts on the country’s herd and imports if the number of cases increases. South Korea is one of the largest global importers of pork, and this is normal because of the production deficit in domestic consumption. A deepening of ASF could lead to an expansion of imports, which would be beneficial for Brazil.
Recently, the US Department of Agriculture (USDA) released a report on the world’s meat industry, and there are estimates for the Asian country. USDA estimates South Korea’s pork production in 2024 at 1.390 mln tons, down 3.47% from last year’s 1.440 mln tons. If confirmed, that would be the first decline after years of modest growth. In absolute numbers, it is a decline of 50 thousand tons, which is not absurd.
Consumption in 2024 was projected at 2.115 mln tons by USDA, up 0.71% from 2.100 mln tons in 2023. With lower production and expanding consumption, imports should increase by 6.82% and reach 705 thousand tons this year. In 2023, imports from Korea were estimated at 660 thousand tons.
Currently, Brazil exports around 2 thousand tons of pork to South Korea per month, and there is potential for expansion. Today, the Asian country concentrates its purchases in the USA and the European Union. If the situation worsens, Brazil could boost sales, considering that there is great domestic availability and attractive prices. It is worth noting that prices in Europe will remain at high levels over the year due to the tendency to reduce supply and maintain firm prices. In recent months, conversations between Brazilian and Korean authorities to strengthen business involving proteins of animal origin have advanced, which could bear fruit in the future. South Korea, like Japan, is quite demanding in negotiations and bureaucratic issues, but the tendency is for progress. In short, if ASF advances in South Korea, the tightening of negotiations would be faster. Even if the worsening does not occur, Brazil tends to expand sales in the future, but gradually, due to gains in attractiveness compared to competitors in the world market.
USDA does not show numbers out of the curve that would lead to the belief that there is a decline due to animal health issues. In any case, it is worth closely monitoring the news and data from upcoming publications.
The big issue is that Brazilian pig farming remains dependent on a high flow of exports to find a balance and healthy prices. At this moment, China is acting very timidly in purchases and bringing down prices, impacting industry margins and live negotiations in the Brazilian market, which is natural, considering the severe crisis that the Chinese are facing due to excess supply. The normalization of prices and advances in purchases from China, in a more striking way, tend to occur in 2025 only. South Korea is not the factor that will change the Brazilian route, not today, but growing sales are positive.
In addition to exports, Brazilian pig farming must pay attention to the level of production and avoid advances. A point to be mentioned is that the average weight of live pigs may increase with the recent price lows in corn and soymeal, which is likely to have a negative impact on meat price formation.
Copyright 2024 – Grupo CMA