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May 31, 2016

Situation for Hog Producers in Brazil should Start Improving

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The last few months have been a very difficult time for hog producers in Brazil. A scarcity of corn has resulted in record high corn prices at the same time that consumer demand for pork was declining due to the deteriorating economic situation in Brazil. Hog producers though feel that the situation will improve in the coming months.

As the safrinha corn harvest gets underway, the supply of corn is expected to improve significantly and the Brazilian Association of Hog Producers (ABCS) is expecting corn prices to decline 20% to 30%. The demand for pork is also expected to pick up with cooler weather in Brazil. In fact, the combination of reduced hog production and increased consumption of pork has resulted in an increase of 21% in pork prices in the state of Sao Paulo during the month of May.

While the situation looks better going forward for the next few months, many hog producers could still lose money on their hogs, just not as much as they have been losing for the last few months.