Ron Plain

Consumer demand for pork has been on a downward slide ever since the high protein/low carbohydrate diet fad passed into history last year. But, it looks like the demand picture is improving. For the first time in nearly a year and half, our preliminary estimate of the retail pork demand index was positive last month.

Through September, U.S. per capita pork production was up 1.5%. But, because of increased exports and a growing domestic population, per capita consumption of pork in the U.S. was down about 1.5%. If demand had held steady, a 1.5% decline in per capita consumption should have produced a 2%, or so, increase in inflation-adjusted retail pork prices.

According to the Bureau of Labor Statistics' monthly surveys, the average price of a pound of pork during the first 9 months of 2006 was $2.806, down 1.2% compared to January-September 2005. Adjusted for inflation, retail pork prices were down 4.7%. Lower per capita consumption and a lower retail price are a clear indication of a drop in demand. Although year-to-date prices are down, the good news is that retail pork prices have been above year-ago levels for each of the last three months.

The live hog demand index has been stronger than the retail pork demand index. Live hog demand benefits from the ongoing strength of the export market for pork. U.S. pork exports are running 12% above year-ago levels. Live hog demand was down at the start of 2006, but has been up for the last three months.

It is very difficult to predict changes in meat demand. The huge popularity of the Atkins Diet was a surprise to most everyone. Two things which are positive for retail meat demand are a low unemployment rate and low gasoline prices. Both of these factors have been positive for meat demand in recent months. Hopefully, they will continue to be and this will keep hog prices up. Given the rapid run up in corn prices in recent days, a sharp drop in hog prices would quickly change the bottom line for hog producers from black to red.

ThePigSite News Desk