BRAZIL - From a cereals perspective, one of the main talking points over the past month that has been affecting global grain prices is Brazil’s second, or safrinha, maize crop.
This is because dry weather conditions during key growing stages is feared to have hindered production.
Tight supplies of maize from the world’s second largest exporter has had substantial knock-on effects on its livestock sectors. Worst hit by the record high maize prices is the country’s pig and poultry sectors.
For the pig sector, a combination of record high feed prices and a reduction in domestic demand due to the country’s poor economic state, is pushing producers out of business because many are in a loss making situation. Furthermore there have been reports of increased sow slaughterings in some states.
Brazil produces 1.2 million tonnes of poultry meat per month and slaughters around 3 million head of pigs per month. According to Reuters, it is estimated that up to 15 per cent of pig and poultry processing capacity in the country has shut, which equates to around 225,000 tonnes of meat production a month.
However, as the harvest of the countries safrinha maize crop gets well under way, it should relieve the tight situation slightly. Nevertheless, livestock producers could still lose money as supply will remain tighter than usual.
Brazil is the largest poultry and fourth largest pork exporter in the world. From a UK perspective, a large reduction in pork production and export availability for Brazil could increase demand for our own product.
The second and third largest importers of Brazilian pork in January-March this year have been Hong Kong and China respectively. These two countries also bought around 6 and 18 per cent respectively of total UK pork exports over the same period.
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