Atypical situation in the Mexican pig market

In 2020, Mexico's per capita pork consumption decreased by one kilogram to 18.5 kg, and production was affected by the sanitary crisis (PRRS, PED, etc.), which led to significant losses of piglets and reproductive sows in the national herd. 

However, producer pressure is slowly easing and the current situation in the Mexican pig market is described by Fernando Ortiz-X, Ibero-America Business Development Manager at GENESUS Inc. as "interesting and atypical".

“Over the past days, we have been in contact with pork producers and leaders of pork producers' associations who say they are surprised by the turn that has taken place in the pig industry recently, especially with regard to historical prices, which have broken several records.

If we compare the market prices of pigs in live weight during the quarter from February to May this year, then from February 26 (33 Mexican pesos / kg live weight) relative to the current price of March 26 (47 Mexican pesos / kg live weight) we will see an increase in the manufacturer's selling price by 42.42% in the last quarter.

Now if we do a calculation comparing the exchange rate of the Mexican peso against the US DOLLAR on two dates and put everything in pounds, the difference is even bigger, it will show us a 50.70% increase over the past three months. This calculation is interesting in that it also tells us about the recovery of the Mexican peso against the US dollar, which to some extent contributes to the high cost of imported grain, which further increases the profitability of the local Mexican producer,” he explained in the latest market report.

Current prices are determined by supply and demand, behind which there are several factors:

- losses reported last year by pig producers in their herds,

- integration of large companies,

- EXPORT growth (20% higher than last year's level in the first four months),

- buyers of market pork must pay more to fulfill their obligations to MEAT processors.

“However, the pig industry has started to recover due to the self-isolation imposed by the government last year, and in April reached an increase of 3.3% compared to the same period in 2020. On the other hand, the impact of covid on the food and tourism industry has begun to gradually wane as restaurants and hotels gradually reopen across the country, where the vaccination campaign is actively promoted. If in 2019 domestic consumption of pork was 19.5 kg per capita, then last year it fell to 18.5 kg per capita. However, consumption is expected to recover from now on. In the first months of the year, the consumption of pork and its by-products increased already by 3.2%,” added Fernando Ortiz-X.