Jim Long Pork Commentary, Mexico Trip Report, February 12th 2018

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Jim Long, President and CEO Genesus Genetics

Last week we spent in the state of Jalisco, Mexico. Capital of Jalisco is Guadalajara. Jalisco is the number one state in Mexico for hog production, with over 20% of the country’s output.

Our Observations:

 

Mexico’s hog price is very good at significantly higher price than US prices.

 

Last year Mexico’s pork production increased 5.3%, making it the number one country in the world for percentage pork production increase.

The increase in production has been driven by many consecutive months of profitability.

 

Herd expansion in ongoing with many new sow barns under construction. We wouldn’t be surprised if expansion in Mexico in 2018 is same or greater then the US. Continual profitability has made the industry very bullish.

 

Mexico is the USA’s number one export market for pork exports volume; obviously a very important market and increased Mexican production could cut US exports.

 

Currently PED is tearing up Mexico’s production. Hard to believe, but we were told that possibly 90-95% of production base is being hit by PED. Lots of dead pigs; probably a factor supporting strong hog prices. We all know that 2014 was the most profitable year ever in the United States; 2014 – the year of PED and lower hog numbers. Strange testament that PED, was and still is maybe, the roadway to greater profitability. Cut supply and pork with its non-elastic demand curve and hog prices increase dramatically.

 

Jalisco, a couple of weeks ago was declared free of classical swine fever. Jalisco now can export pork to USA. Not sure that much will be exported, as hog price is significantly higher in Mexico than US. One product exported could be bellies as Mexico are not aggressive consumers of bellies and bellies have a high value in USA.

 

Mexico per capita consumption of pork has increased gradually in the last five years. The big driver of demand in the country of 130 million people is population increase of about 1.5 million people per year, which adds to total pork consumption and demand.

 

The many areas for swine production in Jalisco are centred around the City of Tepatitlan. We were told, and in our opinion from our world travels it is true, that Tepatitlan region produces more livestock – poultry protein within 150 km (100 miles) than any such region in the world. When you travel around the area there are barns everywhere.

 

Tepatitlan is an interesting place, not very good arable land. Feed ingredients need to be imported to the area. It is blessed with low humidity and moderate temperatures both good for livestock and poultry production. The main dynamic we observed was the aggressiveness of several local families that have build food producing empires. Pushing each other in competition for size and profitability. A shining example of collective entrepreneurial spirit.

 

We attended the AMVECAJ swine congress, with trade show and speakers. There were 1600 people registered from many parts of Mexico. It was a well-run event.

 

We were one of the speakers and spoke about our observations on Global Markets, and some of the effects this could have on Mexico. For over last decade our weekly commentary has been featured in Spanish on the swine website, www.porcicultura.com . Consequently, we have become well known. Could be good? Could be bad?

 

Anyway, about 1,000 people showed up to listen to our presentation on Global Markets. We appreciate and thank those who attended.

Our Observations:

 

Mexico’s hog price is very good at significantly higher price than US prices.

 

Last year Mexico’s pork production increased 5.3%, making it the number one country in the world for percentage pork production increase.

The increase in production has been driven by many consecutive months of profitability.

 

Herd expansion in ongoing with many new sow barns under construction. We wouldn’t be surprised if expansion in Mexico in 2018 is same or greater then the US. Continual profitability has made the industry very bullish.

 

Mexico is the USA’s number one export market for pork exports volume; obviously a very important market and increased Mexican production could cut US exports.

 

Currently PED is tearing up Mexico’s production. Hard to believe, but we were told that possibly 90-95% of production base is being hit by PED. Lots of dead pigs; probably a factor supporting strong hog prices. We all know that 2014 was the most profitable year ever in the United States; 2014 – the year of PED and lower hog numbers. Strange testament that PED, was and still is maybe, the roadway to greater profitability. Cut supply and pork with its non-elastic demand curve and hog prices increase dramatically.

 

Jalisco, a couple of weeks ago was declared free of classical swine fever. Jalisco now can export pork to USA. Not sure that much will be exported, as hog price is significantly higher in Mexico than US. One product exported could be bellies as Mexico are not aggressive consumers of bellies and bellies have a high value in USA.

 

Mexico per capita consumption of pork has increased gradually in the last five years. The big driver of demand in the country of 130 million people is population increase of about 1.5 million people per year, which adds to total pork consumption and demand.

 

The many areas for swine production in Jalisco are centred around the City of Tepatitlan. We were told, and in our opinion from our world travels it is true, that Tepatitlan region produces more livestock – poultry protein within 150 km (100 miles) than any such region in the world. When you travel around the area there are barns everywhere.

 

Tepatitlan is an interesting place, not very good arable land. Feed ingredients need to be imported to the area. It is blessed with low humidity and moderate temperatures both good for livestock and poultry production. The main dynamic we observed was the aggressiveness of several local families that have build food producing empires. Pushing each other in competition for size and profitability. A shining example of collective entrepreneurial spirit.

 

We attended the AMVECAJ swine congress, with trade show and speakers. There were 1600 people registered from many parts of Mexico. It was a well-run event.

 

We were one of the speakers and spoke about our observations on Global Markets, and some of the effects this could have on Mexico. For over last decade our weekly commentary has been featured in Spanish on the swine website, www.porcicultura.com . Consequently, we have become well known. Could be good? Could be bad?

 

Anyway, about 1,000 people showed up to listen to our presentation on Global Markets. We appreciate and thank those who attended.

 

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Genesus Welcomes Akira Motoyama

Genesus Welcomes Akira MotoyamaGenesus is pleased to announce Akira Motoyama joining our team.

Akira responsibilities will include being Manager of Packer and Producer Relations, in cooperation with the rest of Genesus Team.
Akira will also be Manager for the Japanese Market for Genesus.

Akira spent twenty-five years as a Genesus customer, at Nippon Ham-Texas Farm. His responsibilities included production performance and pork quality. Akira knows swine production and Genesus. He has first hand experience of Genesus results and premier meat quality. Nippon Ham is the largest importer and producer of Pork in Japan.

Akira has an Animal Science Degree from Hokkaido College – Sapporo, Japan. He lives in Aurora, Illinois with his wife and two children.

We welcome Akira!

click here for more information

 


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