Hog prices in Mexico moved lower seasonally but remain 19% ahead of 2020 levels and the five-year average. In the latest Rabobank Q4 2021 Pork Quarterly report, Christine McCracken, animal protein analyst, says supply disruption in late 2020 and early 2021 have left overall production below earlier expectations.
“September production rose only 0.6% year-over-year, to 135,000 metric tons, despite a weak year-ago comparison,” McCracken says. “This downward shift in production suggests packers may not only be adjusting schedules to address weaker local demand but also to address escalating hog prices.”
Rabobank expects hog prices to stabilize in the fourth quarter in Mexico as hog inventories normalize. Still, McCracken notes herd health challenges may become an issue again as temperatures cool, limiting improvement in 2022.
Feed Costs in Mexico
Most producers are remaining profitable even though most are facing higher feed costs due to elevated corn prices which are up 19% year-over-year.
“Mexico’s heavy reliance on imported feed also exposes producers to higher freight costs, which can dramatically affect a producer’s delivered cost and may soon weigh on the industry’s production decisions,” McCracken says.
Nevertheless, the country’s high per capita pork consumption and natural labor advantages continue to support industry growth. Rabobank expects additional investments in infrastructure and biosecurity to further stabilize production grown in 2022/23.
Domestic Pork Demand
The economy is struggling to come back after the pandemic. Given inflationary trends, Rabobank says consumers are expected to gravitate toward lower-value protein options.
Pork prices are down 21% from peak seasonal levels but are up 12% year-over-year, given lower imports and stronger exports. Meanwhile, pork carcass values are 11% above year-ago levels after averaging 17% below year-ago levels in the first quarter, the report said.
Pork Imports on the Rise
McCracken says Mexican pork imports were up 18% year-over-year in volume through August and continued to move higher in September. Mexican pork exports slowed over the summer when shipments to China fell sharply. Still, shipments to Japan, South Korea and the U.S. remain strong.
More from Farm Journal’s PORK:
Beef Exports Soar in September, Pork Remains on Record Pace for 2021
How Will China’s Pig Herd Handle Months of Losses?
Bulgaria Reports African Swine Fever Outbreak at Industrial Farm
