US Pork Outlook Report - August 2006

By U.S.D.A., Economic Research Service - This article is an extract from the August 2006: Livestock, Dairy and Poultry Outlook Report, highlighting Global Pork Industry data.
calendar icon 20 August 2006
clock icon 5 minute read
USDA Economic Research Service

Live Swine Imports Increase, But Not As Fast As Expected

Forecasts for U.S. imports of Canadian swine were lowered for the second half of 2006 and for 2007. The reductions reflect slower-than-expected increases so far this year, and expectations of much the same level of imports in 2007. Total U.S. swine imports are expected to be about 8.6 million head both this year and in 2007.

U.S. pork production estimates for the second half of 2006 and for 2007 were each lowered slightly to reflect reduced growth in swine imports. Second-half U.S. pork production is expected to be about 10.7 billion pounds, almost 1.7 percent above second-half 2005. Pork production in 2007 is expected to be 21.6 billion pounds, almost 3 percent above anticipated production for this year.

Both Hog Prices and Slaughter Higher Than July 2005

Prices of 51-52 percent live lean equivalent hogs in July were $51.89 per cwt, almost 4 percent above July 2005. Both June and July 2006 are, thus far, the only months in 2006 where hog prices have been higher than the same periods of 2005. Estimated federally inspected (FI) slaughter in July was 7.815 million head, more than 3 percent above July 2005. The willingness of packer/processors to pay higher prices for a larger number of hogs in July likely reflects both increased slaughter capacity in the United States and continued strong demand for pork products. An indicator of wholesale supply and demand conditions, the USDA estimated carcass cutout, averaged $74.43 in July, more than 5 percent higher than July 2005’s.

Third-quarter hog prices are expected to range between $48 and $50 per cwt, 3 percent below the same period last year. Third-quarter pork production is expected to be 5.05 billion pounds, or 1 percent above third-quarter last year. For 2006, pork production is expected to be slightly more than 21 billion pounds, 1.6 percent above 2005. Next year, pork production is expected to increase almost 3 percent above 2006.

First-Half 2006 Retail Pork Prices Below Same Period Last Year

Retail pork prices in the first half of 2006 averaged about $2.78 per pound, about 2.4 percent below 2005. Strong competition from good availability of competing animal proteins--beef and poultry-- as well as the availability of larger quantities of pork products than last year, are the likely factors that held retail pork prices below a year ago. In the second half of 2006, retail pork prices are expected to average in the high $2.70s per pound.

First-Half Pork Exports Impressive, Imports Increase Slightly

In the first 6 months of 2006, U.S. exporters shipped over 1.5 billion pounds of pork products to foreign markets, an increase of more than 15 percent over the same period last year. The top five foreign markets for U.S. pork for January to June 2006 were Japan, Mexico, Canada, South Korea, and Russia. During the same period last year, the top five export markets were Japan, Mexico, Canada, South Korea, and China. The relatively low foreign exchange value of the U.S. dollar, together with animal disease-related restrictions imposed by some major importing countries largely explain the strong demand for U.S. pork products in the first half of 2006.

As discussed in previous issues ( Jul/ LDPM145T.pdf), Japan's imports of U.S. pork for the first half of 2006 do not match the buying patterns of other major importers. Although Japan remains, by far, the largest importer of U.S. pork products, its year-over-year imports of U.S. pork are down by more than 8 percent in the first six months of 2006. The reduction is attributed to larger than normal levels of pork stocks, brought about by very large pork imports in 2004, when animal diseases--Avian Influenza and Bovine Spongiform Encephalopathy--were significant factors in shaping Japanese import demand. Imports have also been slowed this year by stepped-up monitoring by Japanese customs authorities, to ensure importer adherence to the procedures of the Japanese pork import regime.

First-half U.S. pork imports were 7.5 million pounds higher than in the same period last year, an increase of just over 1.5 percent. Most of the increase is attributable to slightly higher shipments from Denmark and other smaller countries that export to the United States. U.S. imports from Canada, however, were slightly lower than the first half of 2005.

Further Information

For more information view the full Livestock, Dairy and Poultry Outlook - August 2006 (pdf)

August 2006
© 2000 - 2022 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.