Brazil - Livestock and Products - Annual 2009

Pork production is forecast to continue to improve in 2010 after a good performance this year, according to Joao F. Silva in the latest GAIN report from USDA Foreign Agricultural Service.

12 January 2010

4 minute read

Report Highlights

Pork production is forecast to continue to improve in 2010 after a good performance this year. Domestic demand is likely to remain steady as Brazilian GDP is expected to rebound to four per cent in 2010.

Executive Summary

The outlook for the Brazilian economy in 2010 calls for a rebound in economic growth to about four per cent, with lower inflation and a continued increase in consumer purchasing power. Brazilian meat exporters are also optimistic about growth of the world economy in 2010 and expect Brazilian exports of beef and pork to increase in their major markets.

Post forecasts beef and pork production to increase at an average of four per cent in 2010, supported by strong export growth and firm domestic demand for animal proteins. Post revised production and export estimates for Brazilian beef and pork for 2009 to reflect new estimates made by trade sources. These estimates reflect the current mood among Brazilian exporters as they continue to face uncertainty in the world market due to the credit crunch.

Beef production will likely drop for the second consecutive year due to a continued shortage of cattle and reduced exports, although domestic demand is supporting any further drop in production. The financial constraints faced by several beef packers in Brazil remain critical, although most analysts indicate some improvement after the bailout of the sector by the National Bank of Economic and Social Development (BNDES).

Review of the pork outlook for 2009 reflects new data obtained from trade sources and reveals higher pork exports and domestic demand as pork prices are competitive with beef prices.

Production

Post forecasts pork production to continue to increase in 2010 at an average rate of four per cent, slightly above the 2009 level. Our projections reflect current optimism of pork exporters for increasing exports during next year and assume that the worst of the global financial turmoil is over. However, traders remain cautious about the impact of the valuation of the Brazilian currency and access to credit for main importers, such as Russia.

On the other hand, hog producers currently enjoy stability in feed prices, mostly corn. Post also forecasts an increase in domestic pork demand because pork prices are currently competitive with beef prices.

Trade

Post forecasts pork exports to increase by 8 per cent in 2010 as demand from major Brazilian clients remain firm. Brazilian pork exporters are also focusing their strategies in new markets in Asia, such as China, and have begun to advocate for access to the US and Mexican markets.

Brazilian pork exports in 2009 are expected to increase by five per cent reflecting higher shipments to Russia, Singapore, Angola and other Eastern European countries.