US Swine Economics Report - Regular report by Ron Plain on the US Swine industry. Strong demand pushes prices further up.

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Ron Plain

You may have noticed that many crop and livestock prices have been fairly high in recent weeks. Actually, they have been very high. USDA's March index of prices received by farmers was the highest since 1910 when this data series began. Using the period from 1910 to 1914 as a base equal to 100, the prices received index for all farm products in March was a record 773. This means the weighted average price for farm products in March 2004 was 7.73 times the average price for 1910-1914. The index for all crops was 612, the index for meat animals was a record 1126, the index for dairy products was 903 and the index for poultry and eggs was a record 415.

Obviously, inflation has played a role in pushing prices higher during the last 90 years; but by and large, it is strong demand that has driven these indices to their current record levels.

Perhaps, more amazing than the overall record index of 773 for all farm products are the new records for meat animals (1126) and for poultry and eggs (415). Meat prices are high despite there being an awful lot of meat in the country. In fact, USDA is forecasting new records in 2004 for both U.S. meat production and consumption. The government's latest forecast puts 2004 red meat and poultry production at 85.849 billion pounds, 0.4% more than last year and 0.2% more than the 2002 record.

USDA is predicting 2004 U.S. per capita consumption of red meat and poultry at 222.3 pounds, 3.8 pounds more than last year and 1.8 pounds more than the 2002 record. Record meat prices in a year with record supply is not a likely combination.

No one seems to expect the current fabulous demand for meat to last very long. But at this point, it doesn't appear all that likely that the March index of 773 for all farm products will hold the record for more than 30 days.