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Weekly Overview: Spotlight on Brazil

22 July 2013

BRAZIL - After a prolonged period of significant growth - largely down to the growing exports - the Brazilian pig industry is experiencing difficult times exacerbated by general economic malaise in the country. One new region has been pronounced clear of Classical Swine Fever, however. Further outbreaks of African Swine Fever have been reported in several regions in the Russian Federation.

The cost of pig production in Brazil rose by more than four per cent in June, according to Embrapa's Swine and Poultry Concordia (CNPSA). This followed lower spending on animal feed in the first half of the year and as a result, the cost of production was down by more than eight per cent over that period.

Feed represented more than 76 per cent of the cost of pig production in Brazil last month.

According to the latest figures from the country's pigmeat exporting association, ABIPECS, Brazil exported 40,626 tons of pork in June, which is seven per cent down on June 2012. The total volume of pork exported in the first half of 2013 was 240,515 tons, 10 per cent less than the same period last year.

The value of pork exported for the month was US$98 million, nine per cent less than the same month last year. The corresponding figure for the first six months of 2013 was eight per cent below last year's figure at US$630 million.

A new report from Genesus Brazil confirms the slowdown in the pig market there.

After the price recuperation that began in May, prices stabilised at around break-even in June, and now in July a slow decline has set in. This seems to be a result of low demand in both domestic and international markets.

Looking at the June pork exports figures, ABIPECS president, Rui Eduardo Saldanha Vargas, explains that the Ukraine market, which was closed to Brazil in March, reopened in mid-June. This is the major reason for the poor figures in the first half of the year, and is why the second half should be better, he says.

With the closing of the Ukraine market, Russia became the main destination of Brazilian pork this year. ABIPECS believes that the Japanese market could become important in the short-, medium- and long term, now that it has partially opened to Brazilian exports.

If optimism could pay the bills, Martin Riordan of Genesus says pig producers would be smiling from ear to ear.

He explains that in January of this year, the cost of production figure was R$3.00 so over six months, it has fallen by 34 cents of a real (the Brazilian currency). Most of this decrease has been generated by lower feed costs, due to the good harvests of corn and soybeans taken in during the first months of the year, bringing the prices of these basic ingredients down from the critical levels they had reached.

Widespread recent protests show that there is not a lot of optimism in the air in the Brazilian economy generally so there is no encouragement for high investments, particularly in an activity such as pig production that has not shown a return for many years, according to Mr Riordan.

In the last week, the Brazilian Ministry of Agriculture, Livestock and Supply has announced that the region of Acre is free of Classical Swine Fever.

Finally, monitoring the spread of African Swine Fever in the Russian Federation, new outbreaks have been reported in the last week in the regions of Belgorod, Volgograd, Moscow, Smolensk and Pskov. The latter region borders Estonia, Latvia and Belarus.

Jackie Linden

Jackie Linden

Top image via Shutterstock

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