More, Heavier Hogs Come to Market Pushing Prices Lower

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USDA raised first-quarter U.S. commercial pork production by 30 million pounds, as hog slaughter and average dressed weights in February were both higher than earlier anticipated.

Estimated federally inspected hog slaughter in February — 9 million head — was more than 4 percent above a year ago, while average dressed weights will likely finish the quarter more than 2 pounds heavier than animals slaughtered a year ago, according to USDA’s latest Livestock, Dairy and Poultry Outlook report.

First-quarter commercial pork production is expected to be 6.2 billion pounds, almost 7 percent greater than a year ago. Prices for live equivalent 51-52 percent lean hogs will likely continue to reflect expectations for continued rebound from the effects of Porcine Epidemic Diarrhea (PEDv) last year, that is, from larger supplies of hogs.

Hog prices are expected to average $49-$50 per hundredweight, about 28 percent below first-quarter prices a year ago.

Pork exports decline

January U.S. pork exports were 348 million pounds, a volume more than 21 percent below a year ago. With the exception of South Korea, shipments of U.S. pork to all major foreign destinations were lower than a year ago.

Most of the decline was clearly centered in Asia, to which exports have been hampered recently by labor disputes at U.S. Pacific ports. The dispute has been resolved, but freight backlogs are likely to hamper resumption of smooth export flows well into the first quarter.

Pork exports to Mexico were also marginally lower in January, which could be attributed in part to the high exchange rate of the U.S. dollar.

Pork imports surge

While a high-valued U.S. dollar makes U.S pork relatively more expensive in foreign markets, the flipside is also true: a high-valued dollar makes foreign goods relatively cheaper for U.S. importers. This idea was reflected in January pork import numbers, which, at 92 million pounds, were 32 percent above imports a year earlier.

The United States is expected to import 265 million pounds of pork in the first quarter of 2015, a volume 25 percent larger than a year ago. Total pork imports for 2015, however,  are expected to be 1 billion pounds, slightly below imported volumes in 2014.

Lower pork prices slow to arrive at retail level

Increases in first-quarter U.S. pork production, slower exports, and larger pork imports have all likely played a role in year-over-year lower U.S. pork wholesale prices thus far in 2015.

Since the beginning of the year, the USDA Estimated Pork Carcass Cutout has fallen almost 17 percent.

The January retail composite pork price was $3.989 per pound, down marginally from December ($3.991 per pound), but still more than 6 percent higher than a year ago.

The pork composite retail price is expected to average in the mid-$3.80s for 2015 as retailers endeavor to hold on to strong pork margins that developed last year when beef prices skyrocketed and expectations for lower retail pork supplies abounded as PEDV reduced pig numbers.

USDA will release the Quarterly Hogs and Pigs report on March 27. The inventory and hog production information in the report will aid efforts to discern the extent of hog industry’s rebound from PEDV.

Source:, 3-18-2015

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