Meat and poultry production has been constrained in recent years due to record corn prices caused by the explosive growth of the ethanol industry. That may be about to change. Ethanol production has stabilized, and USDA is forecasting 2012 corn acreage will be the most since 1937. The government is predicting a record yield of 166 bushels per acre. That combination would produce a fall corn harvest of 14.79 billion bushels, up 1.7 billion from the old record set in 2009.
If USDA is right, corn prices this fall should be sharply lower, and the incentive to expand the swine breeding herd will be much stronger. On a note of caution, soybean acres are down and meal prices are close to record levels.
China, South Korea Pose Concerns
U.S. pork exports continue strong. In 2011, exports were 22.9 percent higher than in 2010, and first-quarter 2012 exports were 15.8 percent higher than in January-March 2011. Several of our foreign customers — Japan, Canada and Mexico — are expected to continue to buy lots of American pork.
The concern lies with two erratic buyers — China and South Korea. Last year they made up 21.6 percent of our exports. China is the more volatile. In 2008, China bought 362 million pounds of U.S. pork; in 2009 it purchased 54 million pounds. Last year China bought 668 million pounds. Domestic pork production is growing rapidly in both China and South Korea, and their U.S. pork purchases are expected to be lower. Another concern — the dollar has strengthened in recent weeks, making U.S. goods more expensive.
More Pork on the Domestic Market
Year-to-date pork production has been higher than expected, which is partly due to mild weather, as is evident from looking at slaughter weights. Live weights in Iowa and Minnesota have not been below year-ago levels since November. Weights did take a big drop during last summer’s hot weather. But, unless this summer is even hotter, hog weights could stay well above 2011 levels until late in the year.
Hog slaughter is expected to be up nearly 2 percent this year. More hogs, heavier weights and modest export growth mean 2012 U.S. per-capita pork supplies are likely to increase for the first time since 2009.