CME: 2010 Pork Exports Close to Record

by 5m Editor
15 February 2011, at 8:19am

US - Friday's export report from the Department of Commerce and Foreign Agricultural Service of USDA contained another set of data that were indeed encouraging for the US beef and pork sectors: the value of 2010 exports, write Steve Meyer and Len Steiner.

On this count, 2010 was a record year for the beef industry and near-record year for the pork industry. The relatively weak US dollar helped make US beef and pork cheaper to most of our major export customers all of last year but the dollar had to overcome record-high or near record-high prices of US wholesale cuts. And export demand curves, last time we checked, still have a negative slope, meaning that higher prices result in lower quantities than would otherwise have been sold. But export demands are also inelastic, meaning that lower quantities supplied result in higher total revenues – just what happened for US sectors in 2010.

The first chart below shows annual beef and beef product exports, including variety meats and hides and skins, which are a major source of value for beef cattle. As can be seen, the value of beef and veal meat exports was record large at $3.538 billion last year, breaking the old record of $3.144 billion set in 2003. BSE was discovered in the US in December 2003, causing the huge decline of 2004 which has finally been overcome. Neither beef variety meats nor beef hides and skins were very close to record levels last year but the sum of all three categories was also record high at $5.451 billion, besting the previous record of $5.301 billion , also set in 2003. Total exports of beef/veal meat, variety meats and skins and hides amounted to $159.10 for every head of US commercial slaughter in 2010.

December sales were not quite large enough to push the value of pork and pork product sales to a new record high – but it was much closer that about anyone expected as recently as October. December pork shipments were worth $371 million, 19 per cent larger than one year earlier. Pork variety meat shipments in December contributed another $53.1 million, just over 10 per cent more than last year. Annual pork and pork variety meat shipments in 2010 were valued at $4.08 billion and $524.5 million, respectively. 'Other Pork Products' in the chart at right includes sausage casings, sausages and bologna, lard and pig skins. The value of 2010 pork shipments fell short of the 2008 record of $4.155 billion by only 0.8 per cent. Pork variety meat export value was six per cent lower than the 2008 record while the sum of all three categories, at $4.841 billion, was only 2.5 per cent lower than the 2008 record. The total amounts to $43.91 for each of the 110.257 million head of commercial slaughter in 2010.

But 2010 is past. What might this mean for markets in the coming year? We think more of the same. USDA's forecasts in last week’s World Supply and Demand Estimates pegged 2011 US beef exports at 2.345 billion pounds carcass weight, 1.8 per cent higher than in 2010. The WASDE forecast for 2011 US pork exports is 4.675 billion pounds carcass weight, 10.5 per cent higher than in 2011. Given current cash and futures prices, the average prices of exported beef and pork will very likely be higher this year as well. Higher quantity and higher prices will push these values to new records on both counts – adding significantly to demand at the farm/feedlot level.

Further Reading

- You can view the full report by clicking here.