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USDA GAIN: Livestock and Products


12 September 2014

USDA GAIN: Brazil Livestock and Products Annual 2014USDA GAIN: Brazil Livestock and Products Annual 2014

Post forecasts 2015 production and exports of beef to increase by three and ten percent, respectively. This forecast is driven by greater availability of cattle for slaughter, stable domestic cattle prices, and the ongoing depreciation of the Brazilian currency. These factors will likely make Brazilian beef highly competitive in the world market. Pork production and exports are also forecast to increase in 2015 by five and 21 percent, respectively. Driving forces are lower feed costs due to record soybean and corn crops and higher exports due to the weaker Brazilian real and greater demand from the Russian Federation. In general, high indebtedness of Brazilian consumers is the main constraint for a smaller growth path for domestic demand for animal protein.

USDA GAIN: Livestock and Products

Commodities:

Animal Numbers, Swine

Production:

Post forecasts hog production to increase by two percent in 2015 to support higher pork exports and to accommodate a small increase in domestic demand. Nearly 60 percent of hog production in Brazil is concentrated in the three southern states of Santa Catarina (which is the only state in Brazil free of FMD without vaccination), Parana and Rio Grande do Sul. Because production in these states is vertically integrated, good profitability is expected for hog producers in these areas due to the strong support from large pork packers. During 2014, hog producers, have so far experienced one of their best years in terms of profitability due to lower costs of inputs (corn and soybeans) combined with an adjustable supply and demand of hogs, keeping pork prices at high levels throughout the year. These factors are likely to continue in 2015 as international demand, mostly from the Russian Federation, will likely increase for Brazilian pork.

Commodities:

Meat, Swine

Production:

Post forecasts an increase of nearly 5 percent in pork production in 2015. This forecast reflects the current optimism of the pork industry due to a rebound in the export markets, mostly from the Russian market and a small increase in domestic demand. Packers are confident that lower feed costs and strong sustained domestic and export prices next year will contribute to greater profitability.

Consumption:

Post forecasts a small increase in domestic consumption of pork as Brazilian consumers will likely remain price conscious in 2015 due to high market prices for pork and there overall indebtedness.

An intense marketing campaign in the past few years has increased fresh consumption of pork, but nevertheless, pork utilization in Brazil is estimated at 67 percent for industrial/processing and only 33 percent for fresh consumption. Promotional activities in Brazil are aimed to address two other constraints affecting fresh pork consumption: consumption during the winter months (June-August) and regional concentration of pork consumption in the southern region of the country.

Trade:

Brazilian pork exports are forecast to rebound significantly in 2015, mostly due to projected higher exports to the Russian Federation, due to its politically motivated one-year import ban on the U.S and other countries.

In 2015, trade sources expect that Brazilian pork exports will occupy 35-40 percent of the Russian market. The Russian Federation recently re-established the eligibility of several Brazilian pork processing plants to export pork and pork products, although a number of plants are still delisted. The Brazilian government expects to address concerns of the Russian government regarding the use of Ractopamine before the end of the year, which should result in the relisting of additional Brazilian plants.

Except for Ukraine, due to the political uncertainties in that country, pork exporters look forward to increases in pork shipments to markets such as Angola, Hong Kong, Chile and Japan. Other priorities for market access are South Korea and South Africa.

September 2014

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