Observations:

• Global pork production has increased 10,000 (1,000 metric tons) or 10 per cent since 2007. Global pork production in 2012 is about 42 per cent of total livestock and poultry output. This is a slightly higher percentage of total market shares while increasing production. This is a real sign of a strong industry and growing demand.
  
  
• Beef has lost not only global market share but also a decline in output; since 2007 to 2012 a decline of 1.4 (1,000 metric tons). Beef global market share was 25.7 per cent in 2007 and 2012 22.9 per cent, losing production and market share is not a very positive scenario for the global beef industry.
  
  
• Since 2007 the world’s total livestock and poultry production has increased almost 20,000(1,000 metric tons) or over 8 per cent. This is not exactly a sign of a giant swing to vegetarianism - more poultry and more pork than ever eaten, as the world population and disposable income increase so does pork and poultry consumption. We have huge opportunities. It’s great to be in the pork industry that has a proven opportunity to grow which you can’t say the same for beef!

World exports have increased 20 per cent since 2007; this is a real sign of global interdependence for food. Approximately 10 per cent of total production is expected to be exported n 2012.

The USDA is projecting US pork exports in 2012 will be 2404(1000 metric tons) the highest level ever (2007: 1425). This is up 65 per cent plus from 2007. The US projects in 2012 that the US market share ( per cent) of pork exports among major pork trading countries to be 34 per cent (up from 27 per cent in 2007). The US is the global major pork exporter – it’s a big dog!!

The US advantages include a national swine health that meets or exceeds standards of importing nations, price competitive volumes of pork that allows for major supply availability, a packer industry well capitalized, efficient large plants with an aggressive competitive ownership group. You don’t want to do battle with the shareholders and management of Smithfield Foods, Tyson, Swift, Hormel, Seaboard, Mitsubishi, etc... Couple this with a battle hardened group of technically advanced swine producers. It’s a formidable competitive group and the major reason the US dominates global pork exports.

The flip side of US global pork export dominance is the US industries vulnerability to global trade issues, health risk (remember swine flu) we can never forget Larry Pope CEO of Smithfield Foods (world’s largest hog and pork producer) saying ‘five – six years ago (we paraphrase) US pork exports are an opiate for the US swine industry.’ True then, and even more now without exports a train wreck.

Major Pork Importers

The USDA projects major pork importers to be Russia 900,000 tons, China 650,000 tons, South Korea 550,000 tons, and Japan 1.3 million tons.

Markets

Global pork demand is increasing the US has a major market share in global pork trade. All sounds good, unfortunately the cash hog market and lean hog futures are not reflecting a profitable now or near future. $6.00 a bushel for corn and hog prices in mid to high 80s means next to no profit for producers buying their feed. While those producing and feeding their own hogs are cash flowing just fine.

Maybe we are like the boy who sees the manure pile and believes there must be a pony there but we can’t help it. We still firmly believe that as the seasonal supply of hogs decline over the next few weeks coupled with continued strong pork exports and less domestic chicken and beef. Cash hog prices are going to have a major surge.