January 8, 2010

US pork prices to improve in 2010

American hog producers can expect some relief for their loss-incurring business this year, as market prospects improve.

In 2008 and 2009, US hog producers have lost US$20 per head, which totalled nearly US$5 billion, said Purdue University Extension economist Chris Hurt.

The improving prospects are due to reduction in US pork supplies and improving demand. The large losses have resulted in the US breeding herd dropping an additional 3% in 2009, following a similar decline in 2008. Therefore, pork production will be tighter this year, with output expected to be down 2-3% while domestic availability on a per capita basis will drop by nearly 6%. In addition, pork exports are expected to rise 10%.

USDA estimates pork exports to rise to 4.6 billion pounds, representing 21% of US production, up from 4.2 billion pounds in 2009.

Export increases will help improve pork prices while the recovering US economy will boost domestic demand, said Hurt.

First-quarter live prices are expected to average in the higher US$40.00/cwt range. According to Hurt, the highest prices of the year likely will occur in the second quarter and average in the low US$50.00/cwt range. For the year, live hog prices are expected to average near US$50 or about US$67 on a carcass basis.