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Ron Plain

The demand for pork chops is down sharply this summer. Normally, the summer grilling season drives pork chop prices to the highest levels of the year, but not in 2003. The average retail price of a pound of pork chops in grocery stores in April was $3.393 per pound. In May, they averaged only $3.042/pound and in June $3.058/pound. May retail pork chop prices were 12.8% lower than a year ago, the lowest for any month since January 1999, and the lowest for any May since 1989. Likewise, June pork chop prices were the lowest for any June since 1989.

Weak retail pork chop prices have translated into weak wholesale loin prices. The average wholesale price of pork loins last month (roughly $1.03 per pound for ¼" trim bone-in loins weighing under 21 pounds) was the lowest for any July since 1985.

Weak wholesale pork prices, of course, translate into weak hog prices. Fortunately, pork belly prices have staged their usual summer rally, offsetting some of the weakness in loin values. Amazingly (at least for people like me who remember the late 1980s and early 90s) the average price of wholesale bellies has been higher than loins most days in the last month. In 1992, wholesale bellies averaged less than 30% as much as wholesale loins.

Pork demand was expected to be much stronger this summer than it has turned out. After all, the supply of competing meats is down slightly. Beef imports from Canada totally stopped on May 20 because of the one cow in Alberta found to have BSE. This has helped send retail beef prices to record levels. June retail beef prices were 5.2% higher than in any month prior to 2003.

Granted, the supply of pork is up slightly. U.S. pork production during the first half of 2003 was 9.623 billion pounds, up 0.5% compared to the first six months of 2002. Pork imports are up, but so are exports. USDA estimates that per capita pork consumption during the first half of 2003 totaled 25.0 pounds compared to 24.9 pounds during the same period in 2002. Yet, the retail price of pork averaged only $2.616/pound during the first half of 2003 compared to $2.693 during January-June 2002. A 2.9% drop in the nominal price of pork (a 5.2% decline in the deflated price) when the per capita supply is up only 0.4% does not reflect well on pork demand.