Mexican Hog Markets

by 5m Editor
21 December 2012, at 9:27am

MEXICO - During 2011 consumer pork prices in Mexico increased 4.6 per cent, writes Fernando Ortiz.

The upward trend in pork prices has continued in 2012. The first quarter showed a raise of 9 per cent over year-ago levels while carcass prices increased 23+ per cent and hog prices went up 8.5 per cent (see figure 1). Current hog price in Mexico is 24 pesos (85.69¢/lb liveweight).

Figure 1. Mexican hog (live) and pork (cwe) prices, 2010-2012
Source: Confeporc, SNIIM, 2012

The increase in pork prices through the last year and the continuation of the same trend this year have given strong incentives to increase imports of hams (the most relevant Mexican pork meat import) increase 15 YOY (see figure 2). This upward trend is in contrast with 2011 pork imports, which dropped around 10 per cent YOY.

Figure 2. Mexican ham imports, 2010-2012
Source: Sagarpa, 2012

The augment in imports during 2012 has eliminated some price pressure. However pork prices (at the consumer level) and hog prices have increased around 5 per cent YOY. Feed cost loosed some momentum at the first 2 quarters of 2012 making hog producers more profitable. Also some producers (a few ones) with stocked grain or producers planting their own grain have been moderately profitable this year.

As we have reported in the past Mexican pork is gaining access into international markets such as Japan, the US, South Korea and China. Disease-free recognition remains one of the key barriers for the industry but as science-based discussions continue, the door for Mexican origin pork and pork offal exports will widen. Recently, the National Service of Health, Food Safety, and Food Quality (SENASICA) announced that the China Quality Supervision, Inspection and Quarantine General Administration (AQSIQ), approved the health chart that will enable four Mexican establishments to ship pork to China.

The four Federal Inspection Type (TIF) establishments granted access are located in the State of Sonora and will be eligible to export chilled or frozen pork cuts (not offal at this time). Industry sources indicate that contractual requirements will likely dictate that the product be ractopamine (Paylean) free. Mexican industry members are now analyzing the opportunities to see whether they can produce to Chinese requirements. Mexican industry sources report that per capita consumption in China is around 45 kilograms while Mexican per capita consumption is estimated at 14 kilograms.

The Japanese Ministry of Agriculture recognizes that Sonora, Baja California, Chihuahua, Sinaloa, and the Yucatan are free of classical swine fever (CSF) and are eligible to ship pork meat from Mexican origin swine to Japan. Recently, Japan recognized a TIF establishment located in the State of Jalisco as eligible to supply pork —one of the most important pork producing states in Mexico— and it is likely that Mexico will request Japan authorize an additional 24 TIF pork slaughter and processing establishments.

In the meantime, Mexico is expected to continue exploring foreign market niches for high quality Mexican pork meat while expanding exports to what the industry considers are established markets. However, given that Mexico is a net importer, the United States will continue to be its major foreign supplier.

While free disease is a must for exporting pork, the producers have other challenges to fight beside too. The priority number one in Mexico’s pig production is definitely to get more benefits from the same units they already have. Efficiency must be the name of the game if they want to keep on the market in tough times.

Today’s average cost of production in Mexico (for a good producer) is around 21.50 pesos/kg (US$74.86¢/lb) with liveweight prices fluctuating between 20 and 23 pesos (US$0.70 and $0.80/lb), the swine units should be highly productive to go beyond the breakeven roof.

A really good sow unit in Mexico should be getting some 24 pigs per sow per year. They take from here their own “replacement gilts“.

Unfortunately most of the genetic companies in this market do not care about the quality of the final product when they offer “to close a herd“ as an internal multiplier. The problem is that all of these producers (good producers, in general) are losing money by producing a really bad quality of pigs to the market. So they are sacrificing quality (and money) for getting supposedly high health in their herds. Genesus on the other hand had proven to have the total package for providing both high health and excellent performance and quality on the hogs going to the market.

Calculations on this issue show us loses of about US$10 per sow per year, and this is just on the side of poor quality animals hitting the market. On top of that we have to calculate added loses like less pigs per sow, slow growth, more days to the market, etc. that easily would add other $20+ per sow per year.

Genesus Global Market Report
Prices for the week of July 16, 2012
Country Domestic price
(own currency)
US dollars
(Liveweight a lb)
USA (Iowa-Minnesota) 81.79¢ USD/lb carcass 60.53¢
Canada (Ontario) 1.49¢ CAD/kg carcass 55.09¢
Mexico (DF) 24 MXN/kg liveweight 85.69¢
Brazil (South Region) 3.18 BRL/kg liveweight 69.39¢
Russia 70 RUB/kg liveweight $1.03
China 14 RMB/kg liveweight $1.02
Spain 1.31 EUR/kg liveweight 79.02¢
Vietnam 38,500 VND/kg liveweight 83.92¢
South Korea 4,300 KRW/kg liveweight $1.81