Retail Pork Price Percent change from previous month

First-quarter cattle, hog, broiler, milk, and egg prices averaged above a year earlier. The price increases are in the face of export restrictions currently affecting beef and broilers and larger-than-year-earlier pork, broiler, and egg production. These higher prices are increasing producers’ returns, but sharply rising feed costs (mainly corn and soybean meal) are eroding those higher returns.

First-quarter 2004 pork production and hog prices were both higher than a year ago, reflecting very strong demand for pork products in the United States and in markets abroad--Mexico in particular. January-March pork production is estimated at 5.14 billion pounds, almost 5 percent more than in the first quarter of 2003.

The first quarter price of 51-52 percent lean, live equivalent, hogs was $44.18, per hundredweight (cwt), 25 percent above a year ago. Higher hog prices reflect, in part, strong U.S. consumer demand for pork products, especially bacon. Consumers appear willing to pay more for larger supplies of pork at retail. Hog prices are expected to average about $40-42 per cwt in 2004, almost 5-percent above 2003.

Quarterly Hogs and Pigs Report Largely Neutral

The March 1 Quarterly Hogs and Pigs report indicated that the total U.S. inventory of all hogs and pigs was 2-percent above a year ago, while the U.S. breeding herd was 2-percent smaller. With larger market hog inventories and first-half 2004 farrowings likely a bit larger than earlier reported, the report suggests slightly more pork production in 2004. The reported summer farrowing intentions, 2-percent below actual farrowings a year ago, could suggest lower first-quarter 2005 pork production than in 2004.

Canadian Feeder Pigs/U.S. Finishing Operations an Important Source of U.S. Pork Production

Although the recent Quarterly Hogs and Pigs report indicated U.S. inventories of breeding animals trending lower, U.S. pork production has been trending higher. Higher breeding herd productivity and a developing hog finishing sector in the United States relying on Canadian feeder pigs, together explain higher pork production despite lower breeding inventories. First-quarter 2004 imports of Canadian hogs will likely be record-large, at more than 2 million head. Higher imports reflect strong demand by U.S. hog finishers and lower slaughter demand in Canada.

With imported feeder pigs and slaughter animals from Canada expected to represent almost 8 percent of projected U.S. hog slaughter this year, the outcome of a petition filed by the National Pork Producers’ Council et al, filed last month with the U.S. Commerce Department and the International Trade Commission, could have significant implications for U.S. pork production. Preliminary rulings on the petition, that charges the Canadian Government and hog producers with dumping and unfair subsidy programs, could come as early as the summer of 2004. Final resolution of the issues could take as long as a year after the initial filing of the petition.

Production and Prices Higher in the First Quarter

Weekly Hog Slaughter Percent change from last year

First-quarter 2004 pork production and hog prices were both higher than a year ago, reflecting very strong demand for pork products in the United States and in markets abroad--Mexico in particular. January-March pork production is estimated at 5.14 billion pounds, almost 5-percent more than in the first quarter of 2003. The first-quarter price of 51- 52 percent lean, live equivalent, hogs was $44.18 per cwt, 25-percent above a year ago.

Higher hog prices reflect, in part, strong U.S. consumer demand for pork products, especially bacon. Hog prices are expected to average about $40-$42 per cwt in 2004, almost 5-percent above 2003. Consumers appear willing to pay more for larger supplies of pork at retail. First-quarter retail pork prices, in the high $2.60s per pound, are averaging more than 3-percent above the same period last year. Retail pork prices for all of 2004 will likely average in the high $2.60s, about 1-percent more than in 2003.

Trade Begins the Year on a Strong Note

The U.S. pork industry exported more than 154 million pounds (carcass weight) of product in January, almost 15-percent more than last year. Mexican demand for U.S. pork products was particularly strong. On April 1, the Japanese Government removed its Safeguard on imported pork products, which effectively lowers imported pork prices. Upcoming export numbers are expected to reflect strong Japanese demand for competitively priced U.S. pork products, particularly while the Japanese market stays closed to North American beef products, and some poultry as well.

January pork imports were about 1-percent lower than January 2003. U.S. consumer demand for imported pork products from both Canada and Denmark was lower, likely due to the lower valued U.S. dollar, which tends to make imported goods more expensive.

Links

For more information view the full Livestock, Dairy and Poultry Outlook - April 2004 (pdf)

Source: Livestock, Dairy and Poultry Outlook - U.S. Department of Agriculture, Economic Research Service - April 2004