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Pork/hogs: Second-quarter prices of 51-52 percent lean hogs are expected to average between $52 and $53 per hundredweight (cwt), about the same as second quarter a year ago. For 2008, hog prices will likely range between $46 and $48 per cwt. Next year, hog prices are expected to average between $47 and $51 per cwt. U.S. exporters shipped more than 439 million pounds of pork products to foreign markets in April, more than 95 percent above a year ago.

Fewer Slaughter Hog Imports, Lower Average Dressed Weights = Lower Pork Production

USDA lowered its 2008 and 2009 forecasts of commercial pork production slightly in June, in response to lower-than-expected imports of Canadian slaughter hogs, and lower average dressed weights. The commercial pork production forecast for 2008 was reduced by 100 million pounds, to 23.4 billion pounds, 6.6 percent above production last year. The production forecast for next year was lowered by 235 million pounds, to 22.7 billion pounds, 2.9 percent below 2008.

Data for U.S. swine imports from Canada for April and May show lower imports in each month. Import data for the month of April, issued by the Commerce Department, show a year-over-year decline in live swine imports of almost 2 percent. Weekly import data for May issued by USDA show a reduction of almost 14 percent compared with May of last year. The declines in live swine imports appear to be largely attributable to sharp decreases in slaughter hog imports. In April, slaughter hog (animals weighing more than 110 pounds, for immediate slaughter) imports were almost 15 percent lower than a year ago. For May, slaughter hog (barrows and gilts) imports were almost 40 percent below May 2007.

More Hogs Slaughtered in Canada in April

Rather than being exported to the United States for slaughter, more hogs were slaughtered in Canada in April, reversing a pattern seen most of this year and in 2007. Canadian hog slaughter numbers for April were 5.6 percent above a year earlier, due largely to year-over-year increases in Manitoba (+10 percent), Ontario (+15.8 percent), and Québec (+8.6 percent).
http://www.agr.gc.ca/redmeat/mlmrcalendar.htm. Canadian packers’ success in bidding for slaughter hogs is likely due in part to higher costs of transporting Canadian animals to U.S. slaughter plants. Higher transport costs directly decrease Canadian producers-exporters’ bottom line, creating incentives to reduce long-haul shipments to U.S packing plants.

This year U.S. packers and swine finishers are expected to import about 9.9 million head of swine, about 1.2 percent below 2007. In 2009, ongoing reductions in the Canadian breeding herd are expected to result in fewer imports: 8.8 million head, 11 percent below the 2008 import forecast.

Feed Prices Likely Pushing Average Dressed Weights Lower

Along with lower swine imports for the balance of 2008 and through 2009, U.S. pork producers will likely market hogs at lower weights, due to higher feed costs. Average dressed weights for the rest of 2008 and through 2009 will likely be slightly lower than expected earlier. Lower dressed weights and lower live imports will reduce pork production and contribute to higher hog prices. These factors, together with very strong export demand, will likely result in much higher hog prices in second-quarter 2008 than anticipated earlier.

Second-quarter prices of 51-52 percent lean hogs are expected to average between $52 and $53 per cwt, about the same as second quarter a year ago. For 2008, prices will likely range between $46 and $48 per cwt. Next year, hog prices are expected to average between $47 and $51 per cwt.

Retail Pork Prices Higher in May

Retail pork prices in May were $2.90 per pound, up from $2.86 in April, and from $2.87 in May 2007. For the second quarter of 2008, retail pork prices are expected to average about $2.90 per pound. Large pork supplies and rising beef prices are likely moderating retail pork price increases.

April Exports: Enormous

U.S. exporters shipped more than 439 million pounds of pork products to foreign markets in April, more than 95 percent above a year ago. The 10 largest destination markets in April are listed below. While Japan continues to account for the largest chunk of U.S. exports, China and Hong Kong, taken together, are not far behind. Factors driving U.S. exports include ample supplies of pork and the U.S. dollar exchange rate.

Imports Continue To Back-off

The lower valued U.S. dollar and large domestic pork supplies have worked against pork imports so far in 2008. U.S. pork imports in April were almost 70 million pounds, about 18 percent lower than a year ago. In April, 73 percent of U.S. pork imports originated from Canada and 12 percent from Denmark, compared with 77 percent and 14 percent, respectively, a year ago. Total U.S. pork imports this year are expected to be 907 million pounds, 6.3 percent lower than in 2007. In 2009, imports are likely to be slightly lower at 885 million pounds, 2.4 percent below 2008.

Further Reading

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