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Market Reports


August 3, 2017

 

Brazil pork exports down 2% in H1, affected by meat scandal

 

 

Brazilian pork exports in the first half of 2017 were 2% lower than year-earlier levels, caused in part by the tainted-meat scandal, which broke out in March.

 

According to AHDB Pork, while the Brazilian meat scandal was a contributory factor to the decline, even before then, the year-on-year growth had been slowing down since the second half of 2016, except for January 2017.

 

In the aftermath of the scandal, exports of pork from Brazil were well down on previous months and year-earlier levels in April and May, with shipments falling 16% and 24% respectively, year-on-year, the pork division of the UK Agriculture & Horticulture Development Board said.  However, trade picked back up in June and was marginally (1%) higher last year.

 

AHDB Pork noted that the scandal has had a particularly marked impact on Brazil's pork trade with China, which had been increasing steadily. In the second quarter, Brazilian exports were down by two thirds, compared with April-June 2016.

 

Chinese import demand in general, though, has been softening this year, which should have contributed to some of the decline, AHDB Pork said. "There was also some disruption in Brazilian shipments to Hong Kong with January-June exports down 25% on the year. However, the decline has steadied with exports in June only 6% lower than year-earlier levels", it added.

 

Disruption in trade with Argentina, Uruguay

 

There was also some disruption in Brazilian trade with Argentina and Uruguay but this was mainly confined to April. Similar developments applied to Angola and Singapore.

 

In contrast, Russia consolidated its position as the largest market for Brazil, accounting for 45% of trade in the six months through June. Month-on-month trade eased in April and May, but exports increased sharply in June by 50% compared with year-earlier levels.

 

It was noted that the scandal had no obvious impact on export prices. In January-June the average export price was up 32% on the same period in 2016, to US$2,520 per tonne, leading to the value of exports increasing by 29% year-on-year to $740 million.

 

However, given the appreciation of the Brazilian currency, the export price was only up 15% compared with a year earlier in real terms, AHDB Pork said.

 

"The Brazilian scandal has certainly created uncertainty for its pig meat sector, with domestic pig prices falling in 2017, although feed costs have also declined", AHDB Pork said.
 
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