This led to a massive drop in pork exports in July, to 36,104 tonnes, a figure 31.6 per cent less than the previous month and 17.5 per cent less than July of last year. Exports to Russia in August were 87 per cent down from August 2010, at 2,922 tonnes.

This caused prices to fall sharply in the second half of July, a trend which continued during all of August and right up to the week of 5 September. Prices in south Brazil bottomed out at about R$ 1.95 per kg live weight, equivalent to US$ 1.13. This compares with a production cost of market hogs of around US$ 1.51 so a typical 115 kg market hog was generating a loss of about US$ 44.00.

The loss occurred across the country, though the south suffered most, due to lack of buyers on the market as the integrated companies became more self-sufficient in supplies of live hogs.

As always, there is a lot of speculation about the reasons behind this situation, but it seems clear that the low export volumes bear the main responsibility by causing excess volume to be thrown on the domestic market, driving prices down.

However, since two weeks ago, the market has been showing signs of recovery across the country and prices are rising on a daily basis. In many regions prices have risen between 10 per cent and 20 per cent during these two weeks and are continuing to rise.

Higher exports in August and the first week of September partly explain this phenomenon. Pork exports reached 45,900 tonnes in August, 4 per cent less than August 2010 but 27 per cent higher than July. Although volume fell year over year, the value of exports at US$ 122.1 million was 5.3 per cent higher than the previous August.

Some importing countries stood out in August, showing exceptional increases in volume. Exports to Ukraine, the third biggest importer of Brazilian pork, rose by an amazing 197 per cent compared to August 2010, with a total of 11,959 tonnes. The increase in value was even higher, at 228 per cent. Ukraine neighbors Russia, and it seems unlikely that the Ukrainians ate all this pork!

The supply of corn, until the next harvest is taken up at the beginning of 2012, is a big worry for hog producers. Prices have been held high all over Brazil by good export prices. In the south, corn continues to cost around US$ 7.50 a bushel. In the state of Mato Grosso, which is a big producer, small consumer and is far from traditional markets, the corn price is traditionally 35-40 per cent of the price in the south, but recently it has hit 60 per cent of the southern price, and producers are concerned that corn stocks will run out before their next harvest, which is in March/April of next year. They blame the situation on high exports.

As always, negotiations are in progress to open new foreign markets for Brazilian pork. Currently there is talk in the press of possibilities of exporting to the USA, Japan and China. Past experience teaches that reports fed to the press by those involved are high on optimism and low on real progress. However, many foreign markets could benefit from imports of Brazilian pork which is good quality and has a high health status. As time passes, it becomes more likely that negotiations will overcome the bureaucratic obstacles to such exports, and this could bring sudden relief to producers if it comes about.