Brazilian swine market will have major challenges in 2022

Just like this year, 2022 will be challenging for the Brazilian swine industry. Margins tend to remain tight, especially in the first half of the year, considering that the cost of production will remain at a high level while the price of live pigs is likely to face difficulties in getting consistent highs. It is worth mentioning that corn, the main feedstuff component, must show a stressful scenario in the first months of 2022, considering that besides tight carryover stocks, logistics from January onwards should be centered on soybeans, which will eventually lead to more expensive freight rates. Soymeal may present a lighter scenario in the period, depending on international prices, premiums, and exchange rates. Corn prices may fall in the second half of 2022 if the second crop progresses well with a favorable climate, which will deserve attention.

As for the price of live pigs, considering the monthly average for the Center-South, it has evolved in a lateral movement in 2021, failing to take off even with the high flow of exports. In light of economic uncertainties, the average Brazilian consumer ended up opting for chicken, sending the price of this protein to record levels for most of the year. What are the expectations towards the prices of live pigs and beef in 2022? After year-end festivities, there may be an advance in the replenishment between wholesale and retail, with readjustment of stocks, however, the year-end demand tends to evolve in a timid way, households face higher expenses, besides debts in the first months of the year. Historically, the prices of the Brazilian swine chain goes through difficulties in this period, thus, the outlook for the margins of pig farmers will remain tight.

SAFRAS & Mercado

Tags: cost, live pigs, corn, price, Brazil, soybeans, Production, swine industry, soymeal