Genesus Global Market Report, Mexico Hog Markets, January 23rd 2019

439

Fernando Ortiz, Ibero America Business Development at Genesus Inc.

Mexico’s pig production is increasing, helped by improved genetics and also improved disease control although this remains a major challenge. Structural changes are also boosting production with more large-scale units and integration that stretches from the supply of AI to retailing. Feed is relatively cheap and so are labour costs.

Between 2005 and 2016 the growth in pork consumption has averaged 4% per year. Yet, the domestic industry has been unable to meet this growing demand with production growth only averaging 2% per year based on data from USDA. As a result, increasing imports are having to offset the production deficit.

Mexico is a large consumer market with a population of 120+ million. Per capita consumption averages 19 kg and pork is consumed on a daily basis in a variety of dishes either as fresh or as processed, especially hams. Pork remains a lower cost alternative to beef while being price competitive with chicken. Pork continues to gain consumer confidence as a healthy source of protein.

Mexico is the fourth largest global importer of chilled and frozen pork after China, Japan and Italy. Since 2005 import volumes have grown by 9% per annum and there was a further growth of 19% in the first quarter of 2017. Trade is dominated by the United States that accounted for 85% of the total in the last two years although its share has been over 90%. The only other significant supplier is Canada. Mexican imports are dominated by chilled bone-in hams and shoulders that account for 75% of the total. Frozen boneless cuts account for a further 15% and are used in further processing. Imports include mechanically deboned meat (MDM).

From an American perspective while the new Free Trade Agreement was an important step forward, it’s only the first step. The U.S. pork industry is still dealing with 20% retaliatory duties for product going into Mexico. In response to the U.S. Section 232 steel and aluminium tariffs, Mexico increased duties on most U.S. pork from zero to 20 percent in June. Nonetheless, Mexico exhibits a strong demand for U.S. hams.

On the other hand EU pork exports also surged to Mexico and are expected to continue gaining momentum as Spain, Denmark and Germany take advantage of Mexico’s recently implemented duty-free pork quota.

Prices in Mexico continue steady for most of the market.

View message online
Genesus Global Market Report

www.genesus.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here