Source: Rita Jane Gabbett, MEATINGPLACE, 3/24/17

For the first 2 months of 2017, pork production is estimated to be greater than a year ago, and most pork products are selling at year-over-year higher wholesale prices, according to USDA’s latest Livestock, Dairy and Poultry Outlook report.

More pork, selling at higher prices, implies that pork demand has increased. First-quarter estimated federally inspected pork production is expected to be about 6.4 billion pounds, down slightly from last month’s forecast — due to slightly lower estimated dressed weights — but still almost 3 percent higher than the same period a year ago.

Weekly wholesale pork values, represented by the USDA estimated pork carcass cutout, have averaged about 10 percent higher than a year ago, eight weeks into 2017. Some of this increase is attributable to belly values that spiked early in the year as some suppliers scrambled to cover sales commitments.

Of the primal values that make up the carcass cutout, however, only loins and ribs have shown some year-over-year weakness. So in addition to bellies, other primals — picnics, butts, hams ? are clearing the market at year-over-year higher prices.
Monthly ending cold stocks of pork for January are striking evidence of very strong pork demand. At 527 million pounds, ending stocks were almost 16 percent below a year ago, and significantly below 3- and 5-year averages for January.

Where is pork going if not into cold storage?
Data suggest that both domestic and foreign demand are robust so far in 2017.

On  the domestic side, while weekly load data is running slightly below a year ago — due largely to the New Year holiday falling on a Monday — perceptibly lower pork retail prices are likely giving consumers a reason to re-think animal protein purchases and to opt more often for pork cuts.

Pork composite retail values fell into the high $3.50s per pound in December, the lowest value since May 2013. The composite retail value for January was $3.57 per pound, about 6 percent below a year earlier. Further retail price reductions are anticipated in 2017.

Q2 pork production to accelerate; prices to fall
March marks the beginning of the period in which the fall pig crop approaches slaughter ready weight. The December Quarterly Hogs and Pigs reported that the September-November pig crop was 5 percent above year-earlier numbers.

While first-quarter hog prices are expected to average $50-$51 per hundredweight (cwt), about 13 percent above the same period a year ago, second-quarter prices — which are likely to average $45-$47 per cwt — are expected to fall below year-earlier prices, due largely to the 6-percent increase in pork production that results from increased supplies of slaughter-ready hogs and slightly heavier carcass weights.

On the demand side, larger pork supplies are expected to pressure product prices, which will most likely accelerate exports and press retail prices lower.

Strong exports
Weekly export sales data for U.S. pork show significant increases compared with a year earlier. Year-over-year weekly increases have averaged more than 24 percent through late February.

Reported export sales to Mexico — one of the largest foreign buyers of U.S. pork — averaged almost 70 percent above year-earlier sales. Despite the recent depreciation of the peso, U.S. hams valued in pesos continue to significantly underprice Mexican hams. Fresh bone-in hams account for a significant share of U.S. exports to Mexico.

First-quarter U.S. pork exports are expected to be 1.4 billion pounds, more than 14 percent above the same period of 2016. Second-quarter exports are forecast at 1.385 billion pounds, almost 5 percent above a year ago. For the year, exports are likely to total almost 5.7 billion pounds, more than 8 percent higher than 2016.

Forecasts for 2017 pork production and pork exports imply a 2017 per capita pork disappearance of 50.8 pounds per person on a retail weight basis, almost a pound above availability in 2016.

The export forecast for 2017 implies that 21.7 percent of U.S. commercial pork production is slated to be exported in 2017, up from 21 percent in 2016.

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