Exports’ Rising Tide
U.S. meat exports have been trending higher in recent months. Growing exports mean less meat on the U.S. market and higher livestock and poultry prices. An expanding world economy enables more people to be meat eaters. The dollar’s declining value makes buying U.S. meat increasingly attractive.
The United States exports more chicken than pork and more pork than beef. In 2010, this country exported 18.4 percent of our broiler production, 18.8 percent of pork, 8.7 percent of beef and 10.3 percent of turkey. USDA is forecasting 2011 pork exports will be slightly above the record set in 2008. Last year, the United States exported $43 worth of pork and pork byproducts for each hog slaughtered. This year that may well exceed $50 per hog and $5 billion in total value.
Long Term, COP Trend is Up
Hog production costs move with feed prices. When corn cost $2 a bushel, it costs 40 cents a pound to raise a market hog. In 2008, corn prices exceeded $5 per bushel for six months, and breakeven hog prices briefly surpassed $60 per hundredweight. Record corn prices in recent weeks have yielded record pork production costs. Iowa State University estimates the average market hog shipped in March cost $63.17 per hundredweight (live basis) to produce. If corn holds near $7 for an extended period, breakevens will approach $70 per hundredweight.
Long term, the futures market is predicting that corn will stay above $5 through the end of 2014. If so, breakeven hog prices are likely to remain above $60 per hundredweight live or $80 carcass weight for a very long time.
Don’t Rush or Delay Marketings
Hog prices have had a strong seasonal pattern for over a century. Prior to the 1990s, the seasonal price peak came in August; it has since moved earlier. Over the last eight years, May has recorded the highest average hog price as well as the biggest price increase over the previous month.
From 2003 to 2010, carcass hog prices in May have averaged $8.89 per hundredweight higher than in April. The price decline following May is slow, with June averaging only 84 cents per hundredweight lower than May, and both July and August averaging $1.27 per hundredweight below June. The drop is rapid in September, October and November. So, there is little reason to hurry hogs to market in the spring or delay marketing in the fall.