Accoridng to the USDA's Livestock, Dairy and Poultry report, through early March, production and most price data suggest that solid pork demand continues, even in the face of no-nonsense increases in hog slaughter and pork production in January and February.

Average prices of live equivalent 51-52 percent hogs were $62.18 per cwt in January (11.9 percent above January 2011) and $63.94 per cwt (3.8 percent above February 2011). Retail pork prices in January averaged $3.50 per pound, 7.8 percent greater than a year ago.

January retail pork prices were accompanied by data indicating a record-high wholesale-to-retail spread (202.6) suggesting that retailers were successful in shifting at least part of their 1.1 percent year-over-year higher wholesale pork costs to retail consumers, who appeared willing and able to pay higher retail prices for pork.

Solid domestic pork demand is further reflected in quarterly disappearance estimates. USDA supply forecasts for the first quarter of 2012 point to a 2-percent increase in total pork supply. Accounting for estimates of first-quarter exports and ending stocks leaves total domestic pork disappearance 1.4 percent ahead of firstquarter 2011. So far in the first quarter, then, U.S. consumers appear to be paying more for larger quantities of pork. First-quarter per capita pork disappearance is forecast at 11.5 pounds per capita, 0.49 percent larger than a year ago.

As a counterbalance to higher hog prices and indications of continued strong domestic pork demand, USDA data shows that pork stocks are building ahead of year-ago levels and that wholesale values of most pork cuts have traded at belowyear- ago levels since late January. Stocks of pork at the end of January were 584 million pounds. While significantly higher than a month earlier, the year-over-year increase in total pork stocks was about the same as in January 2011.

The February wholesale value of the pork carcass—$84.44 per cwt—was almost 5 percent below a year ago. However, good availability of pork cuts and relatively low prices are expected to attract buyers’ attention, given that both beef and broiler production and domestic disappearance are expected to be year-over-year lower for most of 2012.

With retail beef prices expected to remain over $5 per pound in 2012, and with 2012 composite chicken prices expected to average almost 5 percent above last year, pork as an alternative animal protein looks better and better.

First quarter prices of live equivalent 51-52 percent lean hogs are expected to average $63-$64 per cwt. For 2012, prices will likely average $63-$67 per cwt. USDA/NASS will release the Quarterly Hogs and Pigs on March 30, which will report March 1 swine inventories, as well as producer’s farrowing intentions.