Brazil: pork export revenue drops despite record shipments

After a little optimistic first half of the year in relation to exports, the pork export volume hit the ceiling at 1 million tonnes. With one week left to close 2022, Brazil has already shipped the same volume seen in 2021 as a whole.

Pork exports stood at 458 thousand tonnes in the first half of 2022, with strong signs of a 10% decrease in sales abroad. However, the trend was reversed, the market reacted, and the total amount accumulated throughout the second half of this year is at 542 thousand tonnes. Shipments totaled 515 million tonnes from January to June of last year.

Please see below the track record of the volume exported of pork (hs 0203) from Brazil to its markets abroad. The data is from DataLiner.

Brazilian pork exports | Jan 2019 – Oct 2022 | WTMT

Source: DataLiner (click here to request a demo)

The difficulty lies in the price charged per ton. Foreign exchange earnings are currently 12% lower than last year for the exported volume. Revenue for 1 million tonnes in 2021 was USD 2.47 billion. In 2022, it will be $2.17 billion. That is, Brazil will export more pork to the world this year, but at a lower cost. The country is selling more meat but at a lower price.

The China factor 

The resumption of Chinese production as soon as the African swine fever outbreak ceased was one of the reasons behind the downward trend in exports. With the re-establishment of breeding stocks, China announced a 10% surcharge on pork imports at the end of last year, which in theory, would discourage purchases and the interest of producing countries in negotiating with the Chinese. And it really did happen.

China should end the year with 20% fewer purchases from Brazil compared to 2021. To give context, China is the biggest buyer of Brazilian pork. In 2021, more than 60% of all pork meat exported by Brazil headed to China and Hong Kong. In 2022, the Chinese should buy around 500 thousand tonnes.

Brazil is diversifying its market to beat the 1 million tonne shipment mark in 2022. The conflict between Russia and Ukraine has favored this movement. The Russians have become important pork producers and exporters in the last decade. However, with the logistical and economic limitations of the war, the Russians restricted their production and exports, leaving room for Brazil.

After China/Hong Kong, the biggest pork buyer from Brazil in 2022 is the Philippines, which should end the year with imports of 70 thousand tonnes. Last year, the Filipinos didn’t take even 30,000 tonnes. Then comes Chile and Singapore, around 50 thousand tonnes each.

Source: Canal Rural

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