GENESUS GLOBAL MARKET REPORT Mexico Pork Market – May 2019

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GENESUS GLOBAL MARKET REPORT

Mexico Pork Market – May 2019

Fernando Ortiz, Ibero-American Business Development Manager

fortiz@genesus.com

Overview of Mexico

Mexico is situated in the southern portion of North America and is surrounded to the south and west by the Pacific Ocean and the Gulf of Mexico in the east. Mexico’s diverse landscape of mountains, deserts, and jungles covers over 770,000 square miles and has a population nearing 130 million. Mexico is the fifth largest country in the Americas and is the most populous Spanish-speaking country in the world. Mexico is comprised of 31 states with Mexico City, its most populous city, as the nation’s capital.

Domestic self-sufficiency for Mexico’s pork production is approximately 58 percent. Historically, the lack of infrastructure, animal disease, and reliance on grain imports has hindered increased production. However, the pork sector has seen expansion and vertical integration in recent years with commercial company investment. Domestic production is supported by an increasing demand for animal protein, improved genetics, and increased biosecurity.

In 2017, Mexico remained the second largest consumer market in Latin America behind Brazil. Consumer expenditure per capita totaled $6,248 in 2017, and this expenditure is expected to grow by 1.8 percent in 2018. Consumers are becoming more knowledgeable about the products they buy and are looking for high-quality protein products at a reasonable price. Pork exports to Mexico have continued to rise even as tariffs and trade tensions have challenged the market.

Since mid-2018, most U.S. pork entering Mexico has faced a 20% retaliatory duty imposed in response to U.S. tariffs on steel and aluminum imports. This turn of events ended six consecutive years of record export volumes to Mexico, and early 2019 is showing no signs of relief. Pork exports haven’t fared as well in 2019, with first quarter volume down 13% year-over-year to 177,420 mt, while value declined 29% to $261.9 million. While the U.S. is still Mexico’s primary supplier of imported pork, Canada, Chile and the European Union are gradually gaining market share and Mexico’s domestic pork production is also trending higher. The 20% duty on pork is really hitting US producers. In 2017, U.S. pork export value reached $1.51 billion (up 12 percent), the second highest on record behind 2014 levels ($1.56 billion). Mexico’s per capita pork consumption has grown by nearly one-third over the last ten years and now sits at just over 39 pounds.

Mexico’s Pork Industry Forecast

Pork Production – in 2019 pork production in Mexico is forecast at 1.36 million MT based on increasing consumer demand stable feed prices, and the modernization efforts of the Mexican industry. The production estimate for 2018 increased to 1.32 million MT.

Pork Consumption – for 2019 the consumption forecast is increased to 2.4 million MT, as demand for pork is expected to continue because of lower prices and consumer preference.

Pork Trade Import – Pork import for 2019 are forecast at 1.25 million MT. Nonetheless, Mexico exhibits a strong demand for U.S. hams and in 2017 set a volume record for pork and pork variety meat exports for the sixth consecutive year at over 1.7 billion pounds (up 10 percent year-over-year).

Pork Export – in 2019 are expected to increase and are estimated at 205,000 MT. The 2018 value was increased to 195,000 MT based on official trade data. Japan is the main destination for almost 75 percent of Mexico’s pork exports, with Mexico shipping almost 90 MT of fresh, chilled, and frozen pork to Japan between January and November 2018. Mexico also shipped sizable amounts of pork to the United States (13.8 MT) and South Korea (13.1 MT) and posted notable export increases to China and Chile during the same period.

Domestic Price – There has not been significant changes on market hog prices in Mexico over the last quarter, compared with other countries as a repercussion of the ASF pandemonium in China. The price has remained relatively stable, but it is expected that in the coming weeks it will start to increase. The average price for the year so far is of 27.48 MX pesos/kg (65 ₡/lb) liveweight compared with 29.13 MX pesos (2018) (69₡/lb).

Average Daily Liveweight Pork Price
2017-2019 ($/kg)

Trends – The retaliatory tariffs on U.S. pork are making the American pig meat sold across its southern border expensive enough to create new competition. Mexico has started to shop around new importing markets. Also, from Mexican industry people we have hear in some areas about American pork producers looking at moving to Mexico or trying to partnership with Mexican producers since Mexican operations are already world-class pork producers, so expansion is not unthinkable.

As for the new Trade Agreement, Jesús Seade, Mexico’s top North American negotiator, said recently about the steel and aluminum tariffs: “From the Mexican point of view, I can tell you we will never dream of completing the USMCA … if that problem has not been resolved”. The point is If the US pork producers don’t have zero tariff trade with Mexico and they stay at 20 percent, it is a great risk to lose the entire Mexican market over time.

Sources: Agri-pulse, Porcicultura.com, USDA, Pork Checkoff, Porcimex, USMEF

Genesus Inc. and Golden Harvesta Agreement 

Superior genetics to the Philippine hog farmers to further strengthen
Genesus as a global business

May, 2019 

Genesus Inc., the world’s largest producer of high health registered purebred swine is proud to announce it has entered into an agreement with Golden Harvesta – a joint venture between Southeast Feeds of the Philippines and Well Hope Feeds of China, to be the leading swine genetic breeder and producer in the Philippines.

This will start with the importation of 2,600 GGP gilts and boars as the foundation stock for the 2,500 sow high health status Nucleus unit situated in the Mountains of Mayantac, Tarlac.

The agreement was signed by Jim Long, President of Genesus and Mr Meng, General Manager of Golden Harvesta. We were pleased to have Mr Jin Wei Dong President of Well Hope and Golden Harvesta; Angel Cachuela and Fe C. Asuncion from the embassy of Canada taking an active part in the signing ceremony.

“Genesus has found a strong partner in Golden Harvesta which will further enlarge our International Nucleus population of Yorkshire, Landrace and Duroc; provide superior genetics to the Philippine hog farmers and further strengthen the Genesus business globally” 

said Paul Anderson, Genesus General Manager for S.E Asia.

The high appetite of the Genesus hog pays dividends in the hot and humid climate in S.E. Asia and provides higher productivity, faster growth and better efficiency. Genesus pigs are strong, fast-growing with exceptional carcass eating experience.

The Genesus genetic improvement program is based on sound theory, disciplined and well-executed selection and mating programs all supported by extensive data collection and testing on live animals and carcasses. Commitment to research and development continues to enhance the existing programs and ensure that Genesus pigs will remain competitive on the future marketplace.

“We are very excited to work hand in hand with Golden Harvesta. Golden Harvesta possesses the same core values, work ethics and professionalism that we at Genesus always adhere and follow.” 

said Jim Long, President of Genesus

Mr Meng, General Manager of Golden Harvesta, selected Genesus to be the future supplier and partner in the new nucleus venture following a visit to Manitoba the home of Genesus. He was impressed by the Genesus persistentance on the registered pure breed system, how Genesus dose the genomic selection, the focus of producing the best pig in the world, and the strong relationship between the Genesus owners and all the staff.

Genesus Philippines will be a mirror image of the Genesus Canadian Genetics ran on the same genetic management, using the Genesus research and development, genetic and technical support.  Genesus Philippines is totally committed to provide to their client partners the best breeding stock and technical support for the Philippine hog market.

With the strong relationship between Golden Harvesta and Genesus we feel confident that this partnership will deliver increased performance and reduced cost of production to the hog farmers of the Philippines.

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