U.S. pork may have found a red-hot market on the global scene, but poultry demand still dominates the domestic side. According to University of Missouri economists Glenn Grimes and Ron Plain, their January-to-July demand index shows domestic pork demand down 3.9 percent, and beef demand down 3.7 percent. Meanwhile, broiler demand was up 0.8 percent and turkey demand increased 3.5 percent from last year's levels.
Of course, live hog and live cattle demand both rose during that period, but it was due to strong export sales for U.S. meat products and fewer imports. This is supported in the duo's weekly Cattle and Hog Outlook reports where Plain and Grimes point out that the January-to-July demand for live hogs jumped 8.9 percent beyond last year, while demand for live cattle rose 1.5 percent. While the pork industry is exporting nearly 25 percent of this year's production, net beef imports as a percentage of production declined to 3.6 percent from 7.9 percent for the same period last year.
Looking specifically at the cattle market, the economists said current futures prices are probably overly optimistic, noting that in the first half of 2009, the beef supply is expected to be down 1 percent to 2 percent, which would mean demand would have to increase 4 percent to 5 percent to achieve current futures prices.
"It is possible, but probably not the most likely scenario with the weak general economy," the economists wrote.
That weak economy has everyone in the meat business nervous as meat and poultry supplies will remain high heading in to the first half of 2009, and then likely tightening in the second half. While the export market has been the savior for the pork sector, it brings with it uncertainty. No one expects the market to fall apart, but with a strengthening dollar, China showing signs of slowing or shifting it's purchases and some other activities, it could be hard for U.S. pork exports to maintain such dominance. With a questionable U.S. economy and meat demand, even the smallest addition to the domestic market will have dramatic price impact.