January 14, 2013

US pork producers set for return to profitability

US pork producers are prepared for a return to profitability after experiencing challenges caused by the 2012 drought and record feed prices.

While the past six months have undoubtedly been a severe test, the situation may be about to improve substantially.

"The US pork industry is poised to have a very fine 2013," says Joe Kerns, Kerns and Associates, Iowa, US. According to Kerns, the combination of input prices and revenues are setting up for what he expects will be a "potentially wonderful" 2013 for North American producers.

While Kerns believes input prices will remain a daunting factor in the new year, he also believes producers are still going to have an excellent year as they "stretch a ground-rule double into a triple."

His optimism is based on a shifting demand curve that may already be taking shape. Indeed, October 2012 pork exports seem to have set the stage. US pork exports set new monthly records in October, according to statistics compiled by the US Meat Export Federation, reaching 218,000 tonnes valued at US$607 million. Export volume for the month also broke the previous monthly record set in November 2011.

Kerns' estimate of EU 2013 pork production is considerably lower than reported in a recent estimate by the USDA. The Livestock and Poultry: World Markets and Trade report forecasts EU pork production to ease by just 1% to 22.6 million tonnes as member countries cope with the ban on sow gestation crates.  The report predicts that EU pork exports will actually grow in 2013 by 4% to a record 2.4 million tonnes.