Pork prices in Mexico are increasing
China's increased demand for pork due to the ASF situation and lower corn harvests in the US are triggering an increase in prices of pork and poultry in the Mexican market. The first effect was seen in the pork market, where prices are starting to go higher after the main suppliers have adapted their offer to the situation in China.
Mexico is importing almost 40% of its pork consumption and prices in the domestic market have started to increase since April, when a hike in the prices of imported pork from the US and Canada has been observed.
"From April to May the price of imported pork from the US and Canada increased 12.8% and 8.1% respectively, due mainly to African Swine Fever (ASF) in China.
The increases derive from the rise that began to register since the beginning of March the futures of the pig before the possibility that China loses 25% of its production because of the ASF. The Asian country produces half of the pig worldwide.
On April 16, pork futures for delivery in August, without considering other costs (ie: logistics costs, insurance and other expenses), reached their highest level since October 2014 and 33 percent higher than on the same date of 2018. Since May pork futures have fallen because of the rise of corn, as it is making more expensive the production of pork and other animal proteins. But they will rise again once there is less domestic production and once China runs out of inventories, which we estimate will happen around August", commented Fernando Ortiz, Genesus Ibero-America Business Development Manager.
Until May, Mexico has maintained retaliatory duties on the US pork up to 20%, which opened the way for more Canadian and European pork imports in the country. Still, pork prices have increased also in these markets and, if China is to lose more than 25% of its swine inventory this year, increased demand from Asia can also lead to a spike in prices for poultry and beef as alternative proteins to substitute the lack of pork in the global market.
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