Demand is still driving this pork market. You’ve been hearing plenty about the strong, nearly unprecedented demand scenario in the pork complex through 2004, and you will likely hear more.
In its recent Outlook Summary, Iowa State University economist looked back at the year’s first six months and ahead at the next six. John Lawrence, Iowa State’s livestock economist, points to the pork market’s improved demand for its strong showing on the profitability side of the equation.
“Our Estimated Returns Series indicates that farrow-to-finish producers have had positive returns since February,” notes Lawrence. That’s certainly welcome after 27 consecutive months of losses. “Profits for May and June are estimated in excess of $30 per head,” he adds.
The demand boost has pushed barrow and gilt carcass prices to an average of $68.45 per hundredweight for the first half of 2004. That compares to $54.32 for the same period in 2003. That’s a 26 percent increase in prices, with a 3.9 percent in supplies. “A shift in demand is the only way to explain an increase in both supply and price,” says Lawrence.
Live-hog weights have continued to climb. Lawrence points out that federally inspected hog slaughter has averaged 3.5 percent higher than in 2003 through the first half of this year. Production was 3.9 percent higher.
Sow slaughter on average has been 4.1 percent higher for the same period. There are signs of it slowing, however, as of late June, signs surfaced that sow slaughter might be slowing.
Canadian hogs have added to the U.S. supply. For the first half of the year, Canadian weaned pigs entered the United States at a rate 24 percent higher than that of a year ago—110,000 head a week. Canadian hogs headed directly to U.S. packers more than doubled in the first six months of 2004, notes Lawrence. That’s a 614,000-head increase through June.
The forecast is for pork and live-hog demand to remain strong, and pork will benefit from high retail beef prices, says Lawrence, at least through year’s end.
Iowa State University