Q1 pork exports expected to be year-over-year lower

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Export ship According to its latest Livestock, Dairy and Poultry report, USDA lowered its first-quarter 2013 export forecast to 1.3 billion pounds from 1.4 billion pounds in recognition of currently soft foreign demand for U.S. pork products.

First-quarter exports of 1.3 billion pounds imply a 10-percent reduction from exports a year ago.

During the first quarter of last year, U.S. processors were shipping product to China as part of a contract consummated in the fall of 2011. With no such contracts currently in place, and with the currency of the largest foreign buyer of U.S. pork products— Japan —depreciating sharply in the first 2 months of the year, prospects for U.S. exports for the balance of the quarter appear muted.

The figure below shows weekly pork wholesale prices that have largely lagged year-ago prices, signaling weak demand since the beginning of the year.

click image to zoomPorkUSDA

While soft domestic demand could also contribute to year-over -year lower wholesale cutout prices, of particular note are 2013 wholesale prices of several cuts that are important for U.S. pork export trade.

Prices for butts and picnics are shown below. Both cuts have traded significantly below year-earlier prices and may indicate slower foreign demand.

click image to zoomPorkUSDA

click image to zoomPorkUSDA

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