May 22, 2006

US pork exports up but difficulties loom ahead

US Pork exports for the first 3 months of 2006 are up 22.2 percent on-year.For March, pork exports reached a record monthly high up 23 percent on-year, according to industry analysts. 

The proportion of pork exported versus production increased 2.1 percent on-year, meaning that exports are playing an increasingly important role in US hog production. 9.6 percent of the US pork produced in the first 3 months of 2006 was exported.

With exception to Japan, the top customer for US pork whose pork purchases fell 7.8 percent this year, most other US customers increased their pork purchases, especially Russia, whose purchases increased by 147 percent. (See table) 

Although Japanese purchases have fallen, it still constitutes about 30 percent of the export demand for US pork. Drug restrictions from Japan are likely to become more stringent and would have a tremendous effect on prices if they were to institute a ban due to drug residues.

Furthermore, higher corn prices (which impact feed prices) are expected through to the next year, as indicated by the rising prices of corn futures market.

Adding to the woes of producers are the double whammy of energy prices heading northwards and hog prices falling due to over-production.