The live pig x corn exchange ratio worsened in December


Porto Alegre, January 11, 2024 – The price of live pigs and carcasses increased in the Center-South region of the country in December, with a heated replenishment along the chain, favored by the festive period, however, the exchange ratio with corn worsened, causing some apprehension among market agents. The average price per kilogram of live pigs traded in the Center-South of the country rose by 4.55% in December compared to November, going from BRL 6.02 to BRL 6.30 per kilogram. On the other hand, the average price of corn traded in the region went from BRL 59.18 to BRL 66.35, up 12.11%.

The pig/corn exchange ratio worsened mainly in São Paulo, changing from 1.96 at the end of November to 1.74 at the end of December, down 10.82%. In other words, with the price of one arroba of pork it was possible to buy 1.74 corn bags at the end of 2024. In Santa Catarina, the largest national producer, the ratio worsened by 3.81%, going from 1.75 to 1.68. The exchange ratio is considered healthy from at least 2 bags of corn per live pig arroba.

The big issue is that activity margins tend to be pressured over the next few months, reducing room for errors, and requiring efficient strategies, in terms of both production and acquisition of inputs, on the part of pig farmers and the industry. Brazilian pork production will continue to advance in the first half of the year, with investments maturing, and this in an adverse environment for consumption, considering the higher level of household spending, with tax payments, purchases of school materials, high temperatures, and others. The expectation is for a negative curve for the price of live pigs and carcasses over the next few months, and in parallel the price of corn should remain firm and slow down with the second crop, in the second half of the year, even though there is currently plenty of speculation about part of cereal producers. In any case, monitoring the climate and crop development will be important, so that Brazilian pig farming can make appropriate decisions regarding production, which is essential for the sector’s profitability.

With a possible challenging scenario, pig farmers may once again adopt the strategy of reducing the average weight of animals, as seen in the first four months of 2023, which could help to reduce the meat supply in the domestic market. The high flow of pork exports will be fundamental for adjusting availability and price formation in Brazil in the first half of the year. Regarding exports, there is a complicating factor, China, as will be seen below.

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