The fourth quarter pork export forecast was raised by 60 million pounds, following an announcement by a major U.S. packer of a sales agreement with China, to take place by December 2007. Total U.S. pork exports in 2007 are expected to be 2.97 billion pounds, about 0.8 percent lower than in 2006. U.S. pork exports next year are expected to be almost 3.1 billion pounds, or 3.8 percent above 2007. July 2007 exports to China and Hong Kong, combined, offset year-over-year declines in shipments to major U.S. foreign pork markets. Second-half production is expected to be about 11.1 billion pounds, about 3.4 percent above a year earlier, with live equivalent prices of 51-52 percent lean hogs expected to average between $50 and $51 per cwt in the third quarter, and $45 and $47 per hundredweight (cwt) in the fourth quarter. Commercial pork production next year is expected to be about 22.1 billion pounds, about 100 million pounds larger than forecast last month. The increased production forecast largely reflects revised expectations for U.S. swine imports from Canada, both in the second half of 2007 and in 2008.

Chinese Commitment To Purchase Fourth-Quarter Pork Boosts U.S. Export Forecast

Total U.S. pork exports in 2007 are expected to be 2.97 billion pounds, about 0.8 percent lower than in 2006. The fourth quarter pork export forecast was raised by 60 million pounds, following an announcement by a major U.S. packer of a sales agreement with China, to take place by the end of December 2007. Small increases to first- and second-quarter export forecasts for 2008 are also attributable to continued Chinese efforts to offset domestic supply shortfalls. U.S. pork exports next year are expected to be almost 3.1 billion pounds, or 3.8 percent above 2007.

July Exports Up Year-Over-Year

U.S. pork exporters shipped almost 221 million pounds of pork in July, a quantity more than 2 percent above exports in July 2006. July exports were notable because larger year-over-year shipments to China and Hong Kong, combined, more than offset declines in year-over-year lower shipments to major U.S. export markets in Japan, Mexico, and South Korea. The table below shows that the 4.6 million-pound increase in total pork exports compared with July 2006 (line no. 1) is largely attributable to the 18.8 million pound increase of exports to China and Hong Kong (line no. 4), which more than compensated for the 15.6-million-pound decline of exports to Japan, Mexico, and South Korea (line no. 8).

Larger Live Imports and Heavier Average Dressed Weights Expected To Push Pork Production Up in 2008

The situation and outlook for second-half U.S. commercial pork production is largely unchanged from last month. Second-half production is expected to be about 11.1 billion pounds, about 3.4 percent above a year earlier, with live equivalent prices of 51-52 percent lean hogs expected to average between $50 and $51 per cwt in the third quarter, and $45 and $47 per cwt in the fourth quarter. Second-half price estimates are slightly lower than for the same period last year.

Commercial pork production next year is expected to be about 22.1 billion pounds, about 100 million pounds larger than forecast last month. The increased production forecast largely reflects revised expectations for U.S. swine imports from Canada, both in the second half of 2007 and in 2008. Second-half 2007 imports of Canadian swine are expected to increase to 4.925 million head, an increase of more than 8 percent from the 4.543 million head imported in same period last year.

Roughly 70 percent of second-half 2007 imports are expected to be finishing animals. Finishing animals imported in the second half of 2007 will be slaughter-ready in the first half of 2008.

In total, U.S. swine imports are expected to reach 9.6 million head this year, almost 10 percent above last year. Larger swine imports are due to continued turmoil in the Canadian slaughter industry. Uncertainty created by lower packer prices in Alberta and plant closings in Saskatchewan and Manitoba is likely to persist through this year, before moderating next year.

U.S. imports of Canadian swine in 2008 are expected to be 9.7 million head, uniformly increasing at a year-over-year rate of about 1 percent in each quarter. Larger numbers of finishing animals expected to be imported in the first half of 2008 will be slaughter-ready in the second half, contributing to increases in second-half U.S. pork production.

Average dressed weights are also expected to increase slightly next year, contributing to pork production increases. Average dressed weights in each quarter of 2008 are expected to increase by about 1 pound. Expected dressed weight increases are attributable to slightly lower corn prices next year and continued strong packer demand for hogs.

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