Exports driving US hog, pork prices
Aug. 17, 2011
by Meat&Poultry Staff
WASHINGTON – Second-half hog and pork prices are predicted to remain at record-high levels, supported by accelerating pork exports, according to the US Department of Agriculture’s Economic Research Service. USDA raised its forecasts for both third- and fourth-quarter 2011 pork exports, with shipments to Asia and North America expected to be particularly robust.
Third-quarter exports are expected to be 1.2 billion lbs., more than 26 percent higher than a year earlier. Fourth-quarter exports are forecast to be 1.3 billion lbs., more than 13 percent above the same period last year. In total, US pork exports most likely will surpass 5 billion lbs., both this year, at just over 5 billion lbs., and in 2012, at 5.1 billion lbs.
Foreign demand for US pork products is being accelerated by several factors, but the continued low exchange rate of the US dollar is probably foremost. The low-valued dollar translates into well-priced US pork products in foreign markets, particularly when compared with pork produced by international competitors such as Denmark and Canada. Additionally, pork product deficits in South Korea created by recent foot-and-mouth disease outbreaks continue to drive South Korean demand, while it also appears that Chinese buyers have contracted for late-summer/fall shipments of US pork as part of an effort to stem Chinese food price inflation.
Although second-half US commercial pork production is anticipated to be slightly higher than a year ago, strong export demand is tightening domestic pork supplies, contributing to record prices for hogs and for prices of wholesale and retail pork. It is likely that 22.1 percent of US pork production will be exported this year, an impressive statistic considering that in 2000, 6.8 percent of US commercial pork production was exported.
However, the flip side of strong exports this year is lower available pork per capita. This year, retail weight per capita pork disappearance is expected to be 45.9 lbs., down from 47.7 lbs. last year and from 51.3 lbs. in 2000. Second-quarter 2011 prices of live equivalent 51-52 percent lean hogs were record-high for that quarter, at $68.80 per cwt. Third-quarter hog prices are expected to average $69-$70 per cwt, and in the fourth quarter, $60-$64. If realized, these prices would establish record highs for each quarter.
Strong pork demand is also being reflected in pork wholesale prices. The USDA Wholesale Carcass Cutout averaged $99.27 in July, up 18 percent from July of last year and almost 61 percent greater than in July 2009.
US consumers are paying higher retail pork prices for lower domestic supplies. July retail pork prices were $3.481 per lb., down just slightly from the all-time record-high retail price of $3.484 in June, and almost 9.3 percent higher than in July 2010. Retail prices are expected to remain in the neighborhood of the mid-$3.40s for the balance of 2010, with next year expected to average in the low-$3.40s per lb.