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US Pork Outlook Report - April 2002

by 5m Editor
16 April 2002, at 12:00am

By U.S.D.A., Economic Research Service - This article is an extract from the April 2002: Livestock, Dairy and Poultry Situation and Outlook Report, highlighting Pork Industry data. The report highlights that hog production is running above expectations leading to the lower prices which are being seen.

U.S. Meat Production To Increase

Total meat production in 2002 is projected to be nearly 84 billion pounds (lb.), up 1 percent from a year ago. Poultry and pork production are expected to be up modestly, while beef production is expected to be nearly unchanged. Drought conditions are forcing more cattle into feedlots and possibly delaying herd expansion for at least another year.

The March Quarterly Hogs and Pigs Report reported a 2-percent increase in the market hog inventory and producers’ intentions to have 1 percent more sows farrow during March-August than a year ago.

Projected meat exports in 2002 are projected to fall about 2 percent from last year, as all major meats are expected to register declines. Larger meat production and lower exports are pressuring domestic prices downward.

Hog prices have weakened and are expected to average about $40 per hundredweight (cwt) for the year, $6 below 2001.

Hog Production Up Slightly, Prices Down

The Quarterly Hogs and Pigs Report released March 28 indicated that inventories and farrowing intentions were in line with expectations. Pork production in 2002 is expected to be about 1 percent above last year. Hog prices are expected to average about $40 per cwt, compared with $46 in 2001. Hog and pork prices in early 2002 are running below earlier expectations.

Pork Production Nearly Unchanged in First Half

Commercial pork production in the first quarter of 2002 was fractionally lower than a year earlier. The 2-percent lower expected hog slaughter was partially offset by a 1-pound gain in the average dressed weight. Based on the June-August 2001 pig crop and larger expected imports from Canada, second-quarter hog slaughter is expected to be slightly below a year earlier. Heavier dressed weights are expected to hold production about equal with a year ago.

Hogs and Pigs Report Points to Larger Pig Crop in 2002

The Quarterly Hogs and Pigs Report released March 28 supported both industry expectations and last December’s quarterly report in pointing to a larger pig crop in 2002.

The March report showed that 3 percent more sows farrowed in the December-February quarter than in the same period a year ago. Pigs per litter in the December-February quarter were about the same as in the first quarter last year, with the resulting pig crop about 3 percent ahead of the same period a year ago. The larger pig crop, plus larger expected live imports from Canada, point to a third-quarter 2002 slaughter about 3 percent greater than a year earlier. Additionally, heavier dressed weights are expected to lift third-quarter 2002 production about 4 percent above third-quarter 2001 production.

The March report showed producers’ intentions to increase March-May farrowings 1 percent above a year ago, essentially unchanged from the first intentions published in December. If producers follow their intentions, and pigs per litter decline slightly as expected, the March-May pig crop will be only slightly larger than a year ago. The pig crop plus anticipated live imports from Canada imply a fourth-quarter 2002 slaughter only slightly greater than a year earlier. Heavier dressed weights in the fourth quarter are expected to increase production nearly 1 percent above a year earlier.

Farrowing intentions for the June-August pig crop were up 1 percent from last year. If producers’ intentions and expectations for a slightly improved year-over-year litter productivity rate are both met, the June-August pig crop would be about 1 percent higher than a year ago. The pig crop, plus expected imports of live animals from Canada, point to a 1- to-2-percent larger first quarter 2003 slaughter.

In summary, the March Quarterly Hogs and Pigs Report, and USDA forecasts suggest that around 1 percent more sows will farrow in 2002. Higher farrowings and little change in pigs per litter are expected to result in a slightly larger 2002 pig crop.

Larger pig crops and increased live imports from Canada should lift second-half 2002 slaughter slightly above a year ago and suggest higher slaughter into 2003. Heavier anticipated dressed weights, due to continued moderate feed costs and use of improved genetics, should increase 2002 pork production about 1 percent over last year.

Hog Prices Lower on Weaker Demand for Pork Products

First-quarter hog prices averaged $39.43 per cwt, down 8 percent from a year ago. The lower hog prices reflect the weaker market for pork products. Since the beginning of March, the cutout has fallen more than 12 percent. Hog prices are expected to average in the low $40s in the second and third quarters and then fall to the mid $30s in the fourth quarter. Based on current expectations, hog prices in 2002 should average near $40 per cwt, 13 percent lower than in 2001.

Weakness on the live side of the market appears to be driven by lower consumer demand for pork products, as evidenced by declines in pork carcass cutout values since the end of February. Factors contributing to the apparent reduction in consumer demand for pork include the uncertainty that accompanies economic slow-downs and greater first-quarter beef and poultry supplies, both of which compete with pork for consumers’ food dollars. Prices are expected to be relatively weak in coming months due to continued abundant supplies of such competing meats as poultry and beef, as herd expansion is postponed for another year. Although first-quarter retail pork prices are expected to be above a year ago, retail prices for the remainder of 2002 are expected to average below last year, reflecting greater product supplies and competition from beef and poultry.

Live Imports Very Strong

USDA’s Animal and Plant Health Inspection Service data on live hog imports from Canada suggest that first-quarter imports were more than 18 percent ahead of a year ago, and that more than 60 percent of the imported animals are feeder pigs.

More information including all the figures and graphs is avaiable in the full 9 page report, see below for details.

Links

For more information view the full Livestock, Dairy and Poultry Situation and Outlook (pdf)

Source: Livestock, Dairy and Poultry Situation and Outlook - U.S. Department of Agriculture, Economic Research Service - April 16, 2002