Summer is almost here, and the sun isn’t the only thing that’s shining a bit brighter. At least as I’m writing this, the hog market has offered a break in pork producers’ ominous profit forecast. Even at that, it’s a matter of reducing future losses, not reaping profits.

But, hey, who’s to argue? Any reprieve is welcome.

Of course, corn planting ran behind schedule, and you know all too well the weight that market has added to your production costs. All eyes will now focus on the crop-growing season and future yields.

While profitability, not price, is the true business driver, at least hog prices have tried to do their part. In mid-March live-hog prices were $35 per hundredweight; by late-May they had climbed to $58 — a dramatically better-than-average seasonal price shift.

In the past five years, live-hog prices have averaged an $11-per-hundredweight increase from early-April to early-June. As of late-May, this year’s seasonal gain was $23. But what’s most stunning about this scenario is that it occurred with U.S. pork production running 10 percent higher than 2007’s record level.

So what’s up? Well, Thomas Friedman is right, and you are benefiting from a flat world. Oh yeah, and a weak U.S. dollar.

Without improving world economies and rising food demand, the United States’ current pork production numbers would be too burdensome for the homeland to handle.

Demand is the most likely answer for recent hog price support.

First, let’s take a quick look at domestic demand. Americans are bargain shopping, as food and fuel are grabbing more of their paychecks, and pork is a value. For example, in April retail beef averaged $4.17 per pound and pork was $2.86. At a difference of $1.31 per pound, that is significant.

Then there’s USDA’s commitment to purchase $50 million worth of pork products for federal food-aid programs.

But if demand is the driver, exports represent a Formula-1 race car.

Trade data lags several months, so a look at first quarter 2008 is the best we can do. That data shows plenty of good news, as U.S. pork exports for the period were up nearly 40 percent from first quarter 2007 levels. Meanwhile, imports into the United States fell 10 percent. The impact was a 61 percent improvement in net trade volume, notes Chris Hurt, PurdueUniversity agricultural economist.

Translate export sales into a U.S. pork production equivalent and you get 14.8 percent for the quarter compared to 10.2 percent for the same period last year. It’s also worth noting that a red hot February scored the most dramatic results, with exports accounting for more than 20 percent of U.S. pork production. 

Who are your big customers? Japan is back at No. 1, buying 11 percent more U.S. pork in the first quarter of this year than in 2007. Also, Japan bought 20 percent less pork from the European Union (primarily Denmark), a trend that is expected to continue with a decline in the EU’s hog numbers.

Add Hong Kong and China together and U.S. pork purchases jumped 280 percent in the first quarter versus last year, making you their No. 1 supplier. China’s pork production is hurting due to continued disease issues. According to USDA, China’s production was down 13.2 billion pounds last year. For perspective, the United States produced a record 21.9 billion pounds of pork in 2007.

Exports to Russia for the quarter increased 142 percent, and Canada purchased 22 percent more U.S. pork.

That’s all good news. But, while exports have been something of a savior this year, relying so heavily on that market places you in a tenuous position. China has already de-listed 16 U.S. pork plants; Russia has put four on its “hold” list, as well. If a country decides to close its market to U.S. pork for any number of political reasons; or if a disease, residue issue or other food safety concern surfaces; or if the U.S. dollar strengthens, the market scenario — and fallout — change dramatically. 

Expanding export sales has occurred after years of hard work. It has allowed the U.S. pork industry to grow, and as some countries cut production further, you may be called on to fill more of the gap. But Congress’ current pull-back on free-trade agreements is troubling. Colombia, Panama and South Korea are in limbo, and without presidential “fast-track” procedures, some countries may walk away and look for other partners.

Being the world’s No. 1 pork supplier changes your business dynamics. Watching world markets and developments must be part of your decision-making process. Also, participation in USDA’s National Animal Identification System becomes a vital U.S. herd-health and market maintenance effort. It makes industry programs like Pork Quality Assurance Plus, as well as your internal employee training, management and review process, critical to your business and to the industry. Claiming such a big share of the international market means maintaining a quality product, a consistent supply and a sparkling reputation is even more critical.  

While the hog markets still point to spring 2009 before the industry will move back into the black, understand that you are an international player like never before. Enjoy the reprieve that seasonal price gains and export markets may bring; just be sure to think broadly and keep your eyes open.