August 23, 2007
US pork production to rise 3 percent in Q3
US pork production is forecast to increase more than 3 percent during the third-quarter, according to a USDA report released Monday (Aug 20).
The report, Livestock, Dairy and Poultry outlook said third-quarter commercial pork production is expected to be almost 5.3 billion pounds, or 3.2 percent above the third quarter last year.
Dressed weights are expected to be slightly higher than a year earlier, for the first time in 2007.
The increase likely reflects lower feed costs compared with the first-half 2007.
Total pork production forecast for 2007-21.6 billion pounds-is more than 2.8 percent higher than production last year.
Third-quarter prices for live equivalent 51-52 percent lean hogs are expected to range between $50 and $52 per cwt, about the same as the third-quarter 2006.
Third-quarter forecasts for largely flat hog prices, when hog slaughter is also expected to increase in line with production expectations, are likely to lead to strong packer demand for live hogs.
However, demand for certain pork products could be softening.
July 6-August 3 weekly average wholesale pork prices were almost 1 percent lower than the same period last year, with large declines in ham values and lesser declines in butt values.
The decline is attributed to lower demand from Russia and Mexico.
In June, the weekly composite primal ham value declined about 8 percent, while stocks of ham increased 53 percent.
Falling prices and larger ham stocks occurred when exports of ham and shoulder cuts fell 27 percent on a productweight basis.
Exports to Mexico-which accounted for 55 percent of the volume of the ham and shoulder tariff lines-were down 25 percent.
Retail pork prices was up 3 percent above second quarter 2006 and averaged $2.87 per pound.
The price increase was due to higher supply costs, and not lower pork supplies, the report said.
Higher retail pork prices make pork less competitive with other meat proteins like chicken. Furthermore, broiler production is expected to accelerate in the second half of this year.
For the second month in a row, the July retail pork price set a new record high, at
$2.94 per pound.
Meanwhile, pork exports were lower in June, and in the first half, with the drop getting steeper.
In June, US pork exports was 218 million pounds, about 8 percent less than a year ago.
For the first half of 2007 total US pork exports were 1.48 billion pounds, 4 percent less than the same period in 2006.
The drop in exports was due to lower shipments to Mexico (-31 percent) and Russia (-21 percent).
Lower Mexican demand is likely due to macroeconomic weaknesses, related to manufacturing and repatriated wages from workers in the United States.
In Russia, competition from Brazil is slowing demand for US pork products while in South Korea, expanded beef imports in June could have caused lower demand for US pork.
For the year, US exports are expected to be almost 3 billion pounds, almost 3 percent below 2006.
However, in 2008, plentiful pork supplies and a weaker US dollar are expected to push exports to almost 3.1 billion pounds.
Pork imports also declined slightly.
US buyers imported 496 million pounds of pork products in the first half 2007, slightly less than the 497 million pounds imported in the same period last year.
About 80 percent of US imports came from Canada, and about 11 percent from Denmark.
A recent closure of a slaughter plant in Saskatchewan, and the expected closure of another in Manitoba would likely lead to an increase in the numbers and share of slaughter hogs.
Live swine imports for the first 6 months of 2007 totaled 4.7 million head, an increase of almost 11 percent over the same period last year.
For the year, US swine imports are likely to rise 8 percent on-year to 9.4 million heads.
Finishing animals comprised 69 percent of imports, versus 71 percent last year, while 30 percent of live swine imports were slaughter hogs, compared with 28 percent last year.
