Thanks to good export opportunities and strong domestic demand, the pig market in Brazil is on the rise. In mid-February, prices are trading at levels not seen since 2014. A turnaround in domestic consumption and shifting demand from Asia are fodder for Brazilian pig prices.
The market rally is a clear supply/demand issue, analysts describe the situation. Due to the price crisis in 2016, relatively many pig farmers have given up (or temporarily stopped) and as a result production, or supply, has declined. The question, on the other hand, has turned for the better. For example, domestic buying appetite has picked up as a result of low pig and meat prices last year. The revival in exports is partly due to bird flu outbreaks in Asian countries, which has shifted the preference to pork.
In January, for example, prices rose by approximately 13 percent and in mid-February the prices are converted at 1,62 euros per kilo. With a cost price between 0,90 and 1,20 euros per kilo, which varies by region, these are interesting times for Brazilian pig farmers.
Brazil is the fourth largest producer of pork in the world with an expected production of 3,8 million tons this year. Since Europe has been banned in Russia, Brazilians have dived into the Russian market and that has not hurt the export figures. Since 2014, pork exports have increased by approximately 400.000 tons to just under a million tons. However, the majority of production remains domestic, which makes internal demand a heavyweight for the market situation.
With the Brazilian economy still ailing and political order a long way off, analysts expect the pig price rebound to be finite. Since analysts are anticipating a 60-day limit on price increases and the price rally started in December, the market seems to be hitting a ceiling.
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