ANALYSIS - Brett Stuart, President of Global AgriTrends, told pork producers exports are the critical driver to watch regarding US hog prices. Stuart spoke at the Boehringer Ingelheim Vetmedica business session held at the 2016 World Pork Expo in Des Moines, Iowa, USA.
Brett Stuart, President of Global AgriTrends spoke with ThePigSite's Sarah Mikesell at the 2016 World Pork Expo in Des Moines, Iowa, USA.
"The US swine industry - from an analytical standpoint as we try to determine price - we're always looking at supply and demand," Stuart said. "The supply factor of the US hog situation is fairly stable, and we continue to see production ticking higher driven by productivity as well as additional hog expansion. We're kind of going through a soft expansion phase in the US hog sector."
From the demand standpoint, Americans generally eat about 50 pounds of pork per year. At about 48 to 52 pounds, it's a very stable number and probably more stable than supply, he said.
"Looking at the current situation, we definitely have some concerns, but the plug factor in that equation is exports. We produce; we eat it domestically; and we export," he said.
With five new hog processing plants announced for the US, producers are gearing up to fill those plants and to keep them running. In the next 12 to 18 months, hog production and therefore pork production is expected to continue to creep higher in the US, which Stuart says is concerning.
"We know what US consumers will eat, and so the linchpin to this hog market becomes exports. Exports will be the critical driver of this hog market as we close out 2016 and move into 2017," he said. "That produces some real challenges for us."
The US has solid export market share in Japan and Mexico, but there is volatility surrounding the Chinese market and some other markets. So it's important for producers to keep an eye on the export market, and watch where the US Dollar exchange rate goes. The current strong US Dollar rate makes exports more difficult because of increased competition from European pork in key Asian markets.
"It comes down to supply and demand. As producers we should always be gauging that US demand. That's where roughly 80 per cent of our pork is consumed," he said. "The US demand is critical; exports are critical."