August 20, 2013
How do you like your wings?
August 22, 2013

Strong demand fed increases in slaughter numbers in the first half for pork, although relatively high feed costs helped make profits elusive. Conditions are expected to improve in the second half of the year, however.

Total first-half commercial hog slaughter was 54.6 million head, a slight declined (0.21 percent) compared with last year, largely due to one less slaughter day in 2013. But, the fact that one fewer day only “cost” 114 thousand head (about a quarter of one day’s federally inspected slaughter) implies a stronger daily slaughter rate this year than in the same period a year ago, according to USDA in its latest Livestock, Dairy and Poultry Outlook report.
The stronger daily slaughter rate this year is reflected in higher average first-half live hog prices, and also indicates stronger demand this year for pork. However, stronger first-half live hog prices were not sufficient to offset higher feed costs, and as a result most hog producers’ returns have been negative so far this year. First-half corn prices averaged about 11.4 percent greater than a year ago, while 48 percent soybean meal was more than 20 percent more expensive.

Meanwhile, U.S. pork exports were almost 11 percent below first-half 2012, primarily to to Asia. Lower exports together with slightly higher year-over-year pork imports resulted in a larger quantity of pork for domestic consumption, almost 4 percent greater than in the same period last year.

Larger year-over-year domestic pork supplies typically mean lower prices across the pork supply chain, but not this year: Prices of both live hogs and retail pork were slightly higher year-over- year. (Mandatory Price Reporting changes that went into effect for pork price reporting in April 2013 make year-over-year comparisons of wholesale pork prices impossible until next April). Given strong retail beef and chicken prices so far this year, it is likely that in response consumers bought greater quantities of pork in the first half, paying slightly higher retail pork prices compared with the same period in 2012.

Looking ahead, USDA is forecasting slightly higher pork production for the third quarter, due to higher expected slaughter numbers and slightly higher average dressed weights, and hog producers are expected to receive higher prices for hogs than a year ago. Lower feed costs from an expected larger U.S. corn crop, in particular, should also contribute to improving producer returns. Third-quarter pork exports are expected to be almost 5 percent lower than a year ago, which along with steady imports points to a 1.5 percent increase in domestic pork supply.

Source:, 8-20-2013

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