Reduced Pork Production and Strong Demand

US & CANADA - A US-based agricultural economist credits lower than expected slaughter numbers, reduced slaughter weights and strong demand for pork for record high North American hog prices this summer, Bruce Cochrane writes.
calendar icon 22 August 2011
clock icon 3 minute read

The second week of August saw record high US hog prices with pork cutout values reaching 1.10 per pound of carcass weight and US hogs reaching 105 dollars per hundredweight on a carcass weight basis.

Dr Ron Plain, an agricultural economics professor with the University of Missouri, credits lower than expected pork production resulting from fewer than expected numbers of hogs coming to market, the lowest slaughter weights in two years due to the warm summer and strong demand for pork fueled by strong exports.

Dr Ron Plain-University of Missouri

In the US, domestic market bacon is the key pork cut this year.

We're looking at bacon prices higher than boneless pork chop prices and we've been for about a year and a half in a bit of a food fad here in the United States with some very strong prices for bacon and that has certainly helped out.

Then overall the export market has been very strong this year, especially to Asia.

We're seeing very strong demand coming out of South Korea, in part because they're battling foot and mouth disease and been forced to reduce the size of their swine herd, and then there are a lot of prospects of some very strong shipments in to China which is also coming in a little bit short on production compared to their targets.

Dr Plain observes the US dollar has been weakening for several years which makes US exports of all products including pork more attractive and given the economic problems it looks like the US will continue to have a very weak currency.

He notes, in recent months, the Canadian dollar has been at par and at times more valuable than the US dollar which tends to be a negative development for profits on the Canadian side of the line.

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