By Fernando Ortiz, Ibero-America Business Development Manager
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Pork prices in Mexico soared at record highs during the first half of the year (62% higher year over year) helping producers offset high input costs. Hog prices are expected to plateau in 2022 after record price volatility in 2020/2021, according to Rabobank. Both, production growth and market price, however, have temporarily slowed with an expected rebound in the fourth quarter.
Despite the good prices, for most of the year, 2021 it has not been the best, as in the rest of the world. Nevertheless, we believe that as vaccination spreads to most of the population, the consumption of animal protein will begin to take off again.
A look at the domestic market
Domestic consumption in the Mexican animal protein industry is expected to reach 28.3 million tons this year, 1.2% more than the previous year. Growth will be supported by higher consumption of
- Chicken (3.8%) close to 4.5 million tons.
- Pork (3.4%) around 2.6 million tons; and,
- Egg (3.3%) increase in the consumption of to reach a consumption of 3.2 million tons.
Some expansion pork projects that were put on hold during the pandemic crisis are expected to be reactivated, anticipating an increase in the pig industry of 3.5% higher than the previous year.
On the other hand, Mexico has felt the pressure of demand for animal protein in international markets, especially from China and the United States, which has had a positive impact as a factor that drives national production. Although it is also worrying that poverty in Mexico has skyrocketed due to the pandemic and a lot of families now have to adjust their consumption baskets towards lower-cost proteins (in the best of cases).
International trade
It is expected that Mexican imports of pork in 2022 will be close to a million metric tons, although a little lower than what was imported in 2021 because the national production could exceed the growth in demand.
The United States will continue to be Mexico’s leading foreign supplier of pork, and Mexico will continue to be the second-largest destination for US pork exports, closely following China.
Mexico’s pork exports in 2022 are forecast to remain at the same level as 2021 (390,000 mt) with stable export demand from Asia and the Americas. Mexican exporters have learned to diversify their markets with shipments of high-value cuts to the US and special and more elaborate cuts to Japan and Korea.
Mexican pork exports to the US have increased at a rate of 23% in the last three years. Exports to Canada grew at a rate of almost 15% during the same period. Annual Mexican pork exports to South Korea accelerated in 2021, reaching record highs.
It is also well known by the industry that the importation of swine genetics is a resource of high added value and financially very competitive (compared to countries such as Asians, for example) for Mexico due to its proximity to Canada and the United States. A rebound in the import of breeding stock is expected in 2022, especially focusing on genetics of easy handling + high productivity, low mortality, and excellent production of high-quality meat for markets that demand it.
Sources: USDA GAINS, Rabobank, Agricultural Markets Consultant Group (GCMA)
Categorised in: Featured News, Global Markets
This post was written by Genesus