#19 The Meat Traders' Journal

^{If you missed the last newsletters, you can look them up here.}

🔓Market Movers & Shakers Intel

Global Pork Meat Market Analysis

• Despite the decrease in the metric tons (MT) of exports compared to the previous month, the ranking of U.S. export destinations is as follows: Mexico, South Korea, Japan, China, and Canada.

• Severe flooding in Rio Grande do Sul, Brazil's key meat-producing state, has disrupted operations at numerous chicken and pork processing plants, affecting major industry players like JBS SA and BRF SA. The floods, which submerged towns and blocked roads, led to a halt in slaughtering activities at 12 chicken and 5 pork facilities due to livestock and feed shortages, particularly in the Taquari river valley.

• Latest analytical daily charts lean hog, soybean meal and corn futures

1. Declining trend in prices might suggest that producers prepare for lower revenue from pork sales, influencing decisions on productions scales and budget allocations.

   On a broader scale, if many producers cut back on production due to consistent downward trend in future prices, the overall supply of pork could decrease, which might stabilize or increase prices later on.

2. If prices are nearing a support level, processing plants might want to anticipate a rebound in prices and accelerate purchasing to secure lower costs. Conversely, if prices approach a resistance level, it might be an optimal time to increase sales before potential declines.

3. Risk Management. Bearish signals from MACD (Moving Average Convergence Divergence) suggests caution for buyers as prices might continue to fall.

4. Importers can time purchases using declining futures prices. Use it for market expansion, entering new markets where lower pork prices could disrupt higher-priced competitors..

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1. Analytics: Harness the power of data by developing a robust ability to analyze market trends, balance supply and demand, and make strategic decisions. This skill is foundational and relies on a solid understanding of statistics and data analysis.

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🗺️Regulation

European Union-Mercosur Trade Agreement

The European Union-Mercosur Trade Agreement is considered the second most important trade agreement in the world due to its significant economic and environmental implications.

The agreement has the potential to create a large integrated market of over 780 million consumers, with significant economic benefits for both the EU and Mercosur countries.

Mercosur country members: Argentina, Brazil, Paraguay and Uruguay (Venezuela was member but suspended in 2016)

Key points that we need to know:

1. Tariff Reductions: The agreement aims to cut tariffs on many goods traded between the EU and Mercosur, including meat products. This will enhance the competitiveness of European exports in Mercosur and increase Mercosur product availability in the EU.

2. Increased Market Access: Mercosur countries will gain greater access to the EU market, especially for beef, poultry, and pork. This will significantly boost meat imports from Mercosur into the EU.

3. Quotas and Tariff-Rate Quotas: The agreement sets quotas and tariff-rate quotas for various products, including meat. For instance, it allows for 180,000 MT of poultry meat to be imported duty-free from Mercosur.

4. Environmental and Labour Standards: The agreement seeks to foster sustainable development and environmental protection. It includes commitments to forest conservation, deforestation prevention, and sustainable agriculture. It also enforces fair treatment and respect for workers in the meat industry.

5. Impact on EU Meat Industry: The agreement is likely to affect the EU meat industry significantly. Increased competition from Mercosur might lower prices and impact the profitability of EU producers. However, it also opens export opportunities for EU producers to Mercosur markets.

6. Ratification Process: The agreement must be ratified by the parliaments of EU member states and Mercosur countries. The ratification is expected to face challenges, especially in countries like France, due to environmental and social concerns.

7. Timing and Implementation: The agreement will take effect once ratified by all parties. Implementing it will require establishing new trade, customs, and regulatory procedures, which could take years.

The EU-Mercosur Trade Agreement faces delays in ratification due to its complex negotiation process, which took nearly 20 years and involved diverse interests across multiple countries.

Main Challenges that EU-Mercosur Trade Agreement face to be ratified:

1. Environmental Protection Concerns

2. Impact on local Industries and Agriculture

3. Public Opinion and Political Opposition

4. Implementation Challenges

5. Regulatory Reforms and Political Resistance

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💎Did you know?

From West to East: The Global Shift in Meat Production?

Over the past 50 years, global meat production has seen a massive increase, quadrupling since 1961. Historically dominated by Europe and North America, the landscape of meat production has dramatically changed, with Asia now leading as the largest producer. This shift has seen Asia's meat production skyrocket by an astonishing 15 times. While Europe and North America also saw significant increases—doubling and increasing by 2.5 times, respectively—the rise in other regions, excluding the Caribbean, has been at least five-fold, indicating a global surge in meat production. This change reflects not only growing demands but also evolving economic powers in the global market.

China is the leading producer of pork meat, ahead of other countries by far. Other major producers are USA, Germany, Spain and Brazil.