Hogs/Pork

Pork production forecasts for 2006 remain unchanged at 21.215 billion pounds. First quarter prices of live equivalent 51-52 percent lean hogs are expected to average $42 and $43 per cwt. U.S. pork exports for January were more than 20 percent larger than in January 2005.

Stand-out markets for U.S. pork in January were Mexico, Russia, and South Korea. Through the first week of March, preliminary swine import data shows that total imports are about 7 percent higher than the same period last year, with feeder pigs/iso-wean animals accounting for a greater share.

January Pork Exports Skyrocket

U.S. exporters kicked off 2006 in spectacular fashion by shipping more than 231 million pounds of pork to foreign markets in January, a quantity about 20 percent higher than in January of last year. Only two countries of the “usual” set of importing countries did not increase their year-over-year purchases of U.S. pork: Japan and Romania.

Total Japanese 2006 pork imports are expected to slow more than 10 percent from last year, primarily because 2005 imports were so large that by year’s end Japan’s pork stocks-to-use ratio was much higher than usual. Romania’s January imports of 478,000 pounds were the lowest monthly total since January 2004, when Romanian imports of U.S. pork began to be noticeable each month. Reasons for lower Romanian demand for U.S. pork products are unclear, but overall they were more than balanced by higher U.S. sales elsewhere.

Higher pork exports are largely attributable to attractive U.S pork prices and to a fairly sharp drop-off in the value of the U.S. dollar, making prices to foreign customers even more attractive.

Mexico has historically been the second-most-important foreign market for U.S. pork. And while 2005 was no exception to this trend, last year witnessed a slow down in the rate of growth of Mexican demand for U.S. pork. U.S. exports to Mexico last year were only about 1 percent above 2004 shipments. January 2006 exports to Mexico suggest, however, that the period of slow growth could be over. Mexican imports of U.S. pork in January were more than 30 percent above January 2005. The Mexican economy is expected to expand at an annual rate of 3-4 percent this year, suggesting that consumers’ family budgets could include more meat products. Large supplies of lower priced U.S. broiler products could pressure Mexican demand for U.S. pork this year, however.

Russia was another “stand-out” market in January. Large Russian purchases of attractively priced U.S. pork products likely substituted in part for Brazilian pork and beef products, currently banned from Russia because of recent outbreaks of Foot and Mouth Disease in three southern Brazilian states. It is also possible that Russian consumers are eating more pork due to anxieties associated with recent outbreaks of Avian Influenza. Russia has allocated to the United States a tariff rate quota for pork of almost 156 million pounds in 2006. Last year U.S. exporters shipped about 93 million pounds of pork to Russia.

Pork Imports Open Year on a Steady Note

U.S. pork imports were 86.4 million pounds in January, about 2.5 percent higher than January of 2005. Eighty percent of January imports were of Canadian origin, 11 percent came from Denmark, and most of the balance came from other EU nations, mainly the Netherlands and Poland. It appears that U.S. importers will continue to favor Canadian pork products. In 1995, Canada accounted for 68 percent of U.S. imports and Denmark accounted for 22 percent. Over time the Canadian pork industry has developed, cross border trade relationships have evolved, and transport costs have escalated. In 2005 Canada’s share of U.S. imports was 82 percent, while Denmark’s share declined to less than 10 percent.

Feeder Pigs Account for Higher Share of Larger Swine Imports

U.S. buyers imported 719,881 head of Canadian swine into the United States tin January, more than 7 percent above January 2005 imports. The feeder pig component of January imports was 67 percent, versus 65 percent last year. These import levels, released monthly by the U.S. Commerce Department, comport with weekly import data published by USDAAgricultural Marketing Service.

The weekly data show that through the first week of March, total swine imports were running almost 7 percent above the same period a year ago. Cumulative Canadian Federal and Provincial slaughter through March 4 was off by 5 percent compared with a year ago. More feeder pigs and fewer slaughter ready hogs are coming to the United States this year. The United States is expected to import 8.6 million head of Canadian swine this year, about 68 percent of which are expected to be feederisowean animals.

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

Source: Livestock, Dairy and Poultry Outlook - U.S. Department of Agriculture, Economic Research Service - March 2006