August 10, 2011

Brazilian Pork Exports Fall 17% in July

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazilian pork exports fell 17.5% in July as a result of Russia's decision to suspend meat imports from dozens of Brazilian meat processing facilities. The Russian action in early June affected processing facilities in the states of Mato Grosso, Parana, and Rio Grande do Sul. Brazilian officials and their Russian counterparts are in negotiations trying to resolve the impasse and progress has been reported. The entire issue is expected to be resolved in the next month or two.

Russia has traditionally been the number one destination of Brazilian pork exports. In July, Brazil exported only 3,960 tons of pork to Russia, which was 79.5% less than the 19,420 tons exported in July 2010. During the first seven months of 2011, Brazil exported 112,650 tons of pork to Russia compared to 142,700 tons during the first seven months of 2010.

According to Brazilian Association of Pork Producers and Exporters (ABIPECS) other countries have increased their imports partially compensating for some of imports suspended by Russia. Brazilian exporters concentrated their efforts on increasing pork exports to Hong Kong and Ukraine which traditionally are the number two and three purchasers of Brazilian pork respectively. In July, Hong Kong increased their imports by 80% to 12,800 tons and the Ukraine increased their imports by 66% to 5,775 tons.

Argentina is traditionally the fourth largest importer of Brazilian pork and imports to Argentina fell by 5% in July. Overall pork prices were 5% higher in July 2011 compared to July 2010, which offset some of the reduced exports.

When Russia suspended meat imports, domestic hog prices in Brazil fell to below the cost of production, which was very worrisome for Brazilian hog producers because the low prices came on the heels of increased feed costs due to high corn prices. Hog prices have since recovered, but high corn prices remain the number one concern for hog producers.