April 23, 2009

US pork production in 2009 is expected to be 2.4-percent lower than a year ago, according to new figures by the US Department of Agriculture (USDA).

 

The Quarterly Hogs and Pigs published recently by USDA, showed that producers have reduced the March 1 breeding inventory by slightly more than 3 percent, compared with the same date a year ago.

 

Lower inventories of breeding animals and market hogs, in addition to expectations for year-over-year lower spring-summer farrowings, along with continued reductions in imports of Canadian finishing animals like feeder pigs and segregated early-weaned animals, strengthens prospects for reduced year-over-year pork production well into 2010.

 

US commercial pork production this year is expected to be 22.8 billion pounds, down 2.4 percent from last year.

 

While lower hog supplies are expected to strengthen 2009 spring- and summer- quarter hog prices compared with first-quarter prices, April to September hog prices are likely to lag same-period prices of a year ago.

 

Live equivalent prices of 51 percent to 52 percent lean hogs are expected to average US$49 to US$51 per hundredweight in the second quarter and US$50 to US$54 per hundredweight in the third quarter of this year.

 

Weaker consumer demand for pork - both domestic and foreign - is expected to contribute to reduced packer margins, likely resulting in packer bids for hogs that are or will average below year-ago levels.

 

US pork exports in February were 341 million pounds, down 13 percent a year ago, with US exporters shipping 664 million pounds of pork to foreign destinations in the first two months of 2009, almost 11-percent below a year ago.

 

While lower than last year, and thus a contributing factor to lower pork demand, January to February 2009 exports are more than 25-percent above the same period in 2007.

 

With competitive US dollar exchange rates last year, creating strong incentives for foreign purchases of US pork, and with the brief appearance of significant exports to China and Hong Kong in response to urgent disease problems in China.

 

Barring currently unforeseen random foreign supply and/or demand shocks, US pork exports this year are not likely to top those of 2008, but US monetary and fiscal policies are likely to keep the US dollar valued to maintain the competitiveness of US pork products abroad.

 

At 4.1 billion pounds forecast for 2009, 13-percent below 2008 but 29-percent ahead of 2007, pork exports this year are expected to be strong relative to export history, but not extraordinary.

 

US pork imports in February were almost 61 million pounds, 15-percent below a year ago. Imports from Canada were off by almost 7 percent, while Denmark shipped almost 25-percent fewer pork products to the US in February.

 

Lower imports during a period of lower domestic pork production supported the contention that US consumers have reduced their consumption of pork, likely in response to the ongoing US recession.

 

US swine finishers and packers imported more than 525,000 heads of swine in February, almost 44-percent below February 2008.

 

Lower imports likely reflect reduced Canadian hog inventories brought about by ongoing industry liquidation, in addition to expanded capacity to finish and process hogs in Canada.

 

It is also likely imposition of the US Country of Origin Labelling (COOL) law has made US swine finishers reluctant to import Canadian finishing animals, in light of some major US packers' stated unwillingness to process Canadian-origin animals.