Factors Leading to Rising Pork Prices

US - Pork prices are on the rise as international exports increase and high feed costs are passed on to consumers, said a Purdue Extension agricultural economist.
calendar icon 13 July 2011
clock icon 3 minute read

Retail prices this year are averaging a record $3.35 per pound, up 14 per cent from $2.93 per pound in early 2010.

Increases in exports to South Korea, Japan, Russia and China have led to stronger demand for US pork, said Christ Hurt. Meat designated for export comprised 22 per cent of all US pork in production this spring, and he said that is leaving less for US consumers.

"While it now appears pork production will rise about 1 per cent this year, the large sales to foreign customers mean tight supplies here at home," Professor Hurt said.

In recent weeks, corn prices have fallen after reaching a record high of more than $8 per bushel in some locations. Margins between hog revenues and feed costs are now positive, which is welcome news for the pork industry.

"Everyone in the pork marketing channel is sharing as packer gross margins are up 10 per cent, retail margins are up 14 per cent, and producers received 16 per cent higher prices," Professor Hurt said. "High feed prices over the past four years are finally getting transmitted to consumers."

The national breeding herd has shrunk by 5 per cent in the last three years due to a variety of factors including volatile feed costs and world recession in 2008 and 2009 leading to financial losses.

But after years of uncertainty and decline in the industry, Professor Hurt said the number of market hogs increased this year because sows are now averaging a record 10 pigs per litter.

Despite an outlook for some profits with recent decreases in corn prices, Professor Hurt said the national swine herd is unlikely to expand this summer.

"Pork producers know that corn and soybean yields are not yet assured; the feed outlook could still change sharply depending on final yields in the US and the northern hemisphere," Professor Hurt said. "For this reason, there will be almost no movement to expand herds unless cash corn prices are under $6 a bushel this fall."

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